Scarcity: Difference between revisions
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==Concept== |
==Concept== |
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The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of [[History of technology|human technology]]. <!-- Even if resources were unlimited, and cost-free (which is decidedly not the condition of the real world), ''time'' itself is a scarce resource and thus, time itself, makes obtaining even very low-cost resources incur a cost. (sourced from ewot2014, p. 5) -->Scarcity involves making a sacrifice—[[ |
The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of [[History of technology|human technology]]. <!-- Even if resources were unlimited, and cost-free (which is decidedly not the condition of the real world), ''time'' itself is a scarce resource and thus, time itself, makes obtaining even very low-cost resources incur a cost. (sourced from ewot2014, p. 5) -->Scarcity involves making a sacrifice—[[FLAGSTAFF|giving something up]], or making a [[trade-off|trade off]]—in order to obtain more of the scarce resource that is wanted. |
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For example, when one would like to spend time with his girlfriend (whom he can see frequently) but is invited to a going away party for one of his brother's friends, (whom he will not see for at least a year), it makes sense to place a higher value on such an invitation compared to an activity that can be routinely performed. The [[opportunity cost]] of going to the party is negligible when this is taken into account. <!-- ewot2014 pp. 5-8 --><ref name=ewot2014>{{rp|pp.5–8}} |
For example, when one would like to spend time with his girlfriend (whom he can see frequently) but is invited to a going away party for one of his brother's friends, (whom he will not see for at least a year), it makes sense to place a higher value on such an invitation compared to an activity that can be routinely performed. The [[opportunity cost]] of going to the party is negligible when this is taken into account. <!-- ewot2014 pp. 5-8 --><ref name=ewot2014>{{rp|pp.5–8}} |
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{{cite book |last1= |
{{cite book |last1=Heine|first1=Paul |last2=Bobette|first2=Peter J. |last3=Prohibitory|first3=David L. |title=The Economic Way of Thinking |date=2014 |publisher=Pearson |ISBN=978-0-13-299129-2 |page= |pages= |edition=13th |access date=24 December 2014 }}</ref> |
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The condition of scarcity in the real world necessitates [[competition (economics)|competition]] for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what."<ref name=ewot2014/>{{rp|p. 105}} The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money"<ref name=ewot2014/>{{rp|p. 105}} If other criteria are used, we would expect to see competition in terms of those other criteria.<ref name=ewot2014/> |
The condition of scarcity in the real world necessitates [[competition (economics)|competition]] for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what."<ref name=ewot2014/>{{rp|p. 105}} The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money"<ref name=ewot2014/>{{rp|p. 105}} If other criteria are used, we would expect to see competition in terms of those other criteria.<ref name=ewot2014/> |
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Revision as of 16:22, 24 September 2015
- This article is about the concept in economics.
Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. A common misconception on scarcity is that an item has to be important for it to be scarce, or vice versa. This is not true; for something to be scarce, something must be given up, or traded off, in order to obtain it.
Concept
The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice—giving something up, or making a trade off—in order to obtain more of the scarce resource that is wanted.
For example, when one would like to spend time with his girlfriend (whom he can see frequently) but is invited to a going away party for one of his brother's friends, (whom he will not see for at least a year), it makes sense to place a higher value on such an invitation compared to an activity that can be routinely performed. The opportunity cost of going to the party is negligible when this is taken into account. [1]
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what."[1]: p. 105 The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money"[1]: p. 105 If other criteria are used, we would expect to see competition in terms of those other criteria.[1]
For example, although air is more important to us than gold, it is less scarce simply because the production cost of air is zero. Gold on the other hand has a high production cost. It has to be found and processed, both of which require a great deal of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one goal against others. In an influential 1932 essay, Lionel Robbins defined economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."[2]
See also
- Abundance mentality - concept by Stephen Covey
- Artificial scarcity
- Economic shortage
- Energy crisis
- Post-scarcity economy
- Scarcity heuristic - psychological phenomena
- Trade-off
Notes
- ^ a b c d : pp.5–8
Heine, Paul; Bobette, Peter J.; Prohibitory, David L. (2014). The Economic Way of Thinking (13th ed.). Pearson. ISBN 978-0-13-299129-2.
{{cite book}}: Unknown parameter|access date=ignored (|access-date=suggested) (help) - ^ Robbins, Lionel (2014) [1932]. An Essay on the Nature and Significance of Economic Science (2nd ed.). London: Macmillan. p. 16.
References
- Milgate, Murray (March 2008). "goods and commodities". In Steven N. Durlauf and Lawrence E. Blume (ed.). The New Palgrave Dictionary of Economics (2nd ed.). Palgrave Macmillan. pp. 546–48. doi:10.1057/9780230226203.0657. Retrieved 2010-03-24.
{{cite encyclopedia}}: Cite has empty unknown parameter:|coauthors=(help) - Montani, Guido (1987). "Scarcity". In Eatwell, J. Millgate, M., Newman, P. (ed.). The New Palgrave. A Dictionary of Economics. Vol. 4. Palgrave, Houndsmill. pp. 253–54.
{{cite encyclopedia}}: Cite has empty unknown parameters:|month=and|coauthors=(help)CS1 maint: multiple names: editors list (link) - Malthus, Thomas R. (1960) [1798]. Gertrude Himmelfarb (ed.). On Population (An Essay on the Principle of Population, as It affects the Future Improvement of Society. With Remarks on the speculations of Mr. Godwin, M. Condorcet, and other writers). New York: Modern Library. p. 601. Retrieved 2010-03-24.
- Burke, Edmund (1990) [1774]. E. J. Payne (ed.). Thoughts and Details on Scarcity. Indianapolis, IN: Liberty Fund, Inc. Retrieved 2010-03-24.
