Almost no one has unlimited economic resources. Most people, most families, and certainly all countries experience shortages in funds. In other words, they want (or perhaps need) more than they can afford. Therefore, they have to make economic decisions about how to prioritize and use the resources they have. Let's look at some examples.
Individuals make economic decisions every day. You know that in your own experience. You might really have a craving for an extra-large sticky, delicious latte, but you only have enough cash to purchase a cup of coffee. You might use your credit card, but you don't really want to do that for such a small purchase, so you settle for the cup of coffee. You've just made an economic decision about how to allocate your limited resources. You make these kinds of decisions all the time when you decide whether or not you can afford that new piece of clothing, those new shoes, or that new computer. You also make higher level economic decisions when you choose what kind of job you take, whether to switch jobs, or whether to pursue further education.
Families make economic decisions all the time, too. Think back to when you were a child and you really wanted that new toy. Your mom told you “no” because your family's budget was stretched tight enough already that month. As much as it might have disappointed you, she made a necessary economic decision for the family. Families have to think about their budgets frequently, determining how much they can spend each month and where they must prioritize those resources. Rent or mortgage payments, utilities, food, insurance, and transportation top the list. When those are allocated, families have to decide whether or not they have enough left for entertainment or vacations or other non-necessities.
Countries, too, must make economic decisions about how to assign their limited resources. Government leaders create budgets that set certain priorities, defense perhaps or domestic programs. They have to decide how much to allot to each priority and then determine what to do with any resources left over (or more commonly, figure out how to deal with budget shortfalls). Leaders also have to determine levels of taxation and borrowing so they can bring in money to satisfy their budget requirements.