A classic example that many economists use to illustrate what kind of environment economics can be found in is a battle field. After the smoke clears, a group of medics enter the battlefield. A battle field with littered bodies; some alive, some inevitably dying, some that can be kept alive if quickly nursed, and some who will die regardless of the amount of medical attention. What the medics are faced with is an economic decision. The men who will die regardless of amount of medicine spent on them, shouldn't receive any medicine since there is a scarce supply. The medicine should first of all be spent on those who can survive if nursed immediately, and the next group taken care of should be those that were wounded, but not mortally wounded.
Most people can't understand this principle applied to economics today; because they don't understand that money is a scarce resource. So is time, knowledge, and oil. So since there isn't enough to satisfy everyone's want, the free market gets all resources to where they can be the most help for everyone. When this happens we have prices created.