What Is Scarcity In Economics;8 Facts You Must Know

Scarcity is a complex problem which will have a negative impact in our lives. scarcity is a condition in which human beings can not meet their daily needs because natural resources or crops are completely used up without fulfilling what we need. In the world of economics it can be said that scarcity is a condition where human needs  are more than the products available. Basically the scarcity contains this philosophy,”More sacrifice is required to obtain the satisfaction needs of human life”.

 

The scarcity of goods or resources is experienced by everyone, every nation and every country. Despite the different circumstances and conditions, the subject matter remains the same, namely, how humans can meet the unlimited and diverse needs with the availability of a finite means of fulfillment.

A scarcity that will occur has several traits, namely:

  • The price of necessities of life increases drastically from the  normal price in the market due to several factors such as the limited number of products, the demand for the product is high, and the production cost is expensive.
  • Sacrifices must be made by a consumer  to get his needs either in the form of goods or services. Consumers have to sacrifice  with the aim to buy the products they need.

In this case, economics has a big role because the main problem in the world of the economy is how to balance the unlimited needs and wants of human beings with a tool of satisfaction needs that have only a limited number. Scarcity occurs not without cause, the scarcity occurs because it is caused by several factors including:

CAUSES OF ECONOMIC Scarcity

According to  Lipsey , economics is a study of the use of limited or scarce resources to meet unlimited human needs. From that sense, it can be concluded that the core economic problem is scarcity (scarcity) . This condition is caused by several things such as:

  • Limited supply of human resources (Natural Resources)
  • Human limitations in natural processing
  • Human needs are increasing but not accompanied by the human ability to produce objects satisfying the needs or not yet the discovery of new natural resources.
  • Damage to Natural Resources caused by human activities
  • Limitations of the number of objects satisfying the needs that exist in nature
  • Increased human needs faster than the ability to supply means of necessities

Scarcity is the framework within which economics exists. Put another way, without scarcity there would be no reason to study economics. This scarcity framework means that there are not enough, nor can there ever be enough, goods and services to satisfy the wants and needs of all individuals, families, and societies. An examination of your own situation makes this obvious. Do you own the car you would most enjoy? Do you have enough financial resources for the tapes, dates, concerts, textbooks, and boots you want? Does your family ever remark that the recent automobile repair bill means hamburgers, beans, and franks this month? Societies face the same scarcity problem on a larger scale. Money spent for roads is money not available for hospitals. Resources devoted to defense are not available for schools or welfare. Gasoline and oil used now for automobiles will not be available in the future.

The root of the scarcity problem lies in the definition of economics – that people have limited resources to satisfy their unlimited material wants and needs. Material wants are satisfied by the items that people would like to have, such as compact disc players, skateboards, public parks, or a fifth pair of shoes; material needs are satisfied by the goods and services required by people, such as food, medical care, and shelter. Whether a good or service is wanted or needed is sometimes hard to determine, and what is more, we often confuse our own wants and needs. You may think you need a compact disc player when, in fact, you may only have an intense want for it; the officials of a mid-size city might believe that the city needs a convention center when, in fact, the officials just want one.

For either wants or needs, however, people appear to have the psychological ability to continually require more goods and services and to become dissatisfied with what they possess. When this drive for more is considered for all members of society, wants and needs become so great in number that they can be viewed as virtually unlimited. For example, you could devote one class period to listing everything everyone in the class desired both for themselves and for society in general. By the next class period, and in all later periods, the list would increase as students would add goods and services originally forgotten or introduced to them throughout the semester. The list would never be completed! One might recall that ten years ago the average American did not “need” microwave food, a personal computer, sunscreen, a minivan, the services of a fitness center, premium ice cream, antilock brakes, or public libraries with computerized card catalogs.

People’s unlimited material wants and needs are satisfied by using the limited resources available to produce goods and services. These resources include all of the people, materials, machinery, and other items that contribute to the production of goods and services. For example, to create fast, delivered pizzas, a franchise needs cheese and other food products, cooks, order takers, electricity, water, ovens, refrigerators, trucks, cars, managers, boxes, engineers, buildings, and so on. Every resource available for production is limited in amount; there is not an infinite supply of labor, energy, or any other resource.

The problem of limited resources also occurs for individuals. People never seem to control enough resources to earn the money required to purchase everything they want and need, and never have enough time to accomplish everything they want to do. Limited resources keep many students from taking a trip over spring break, upgrading an audio system, or buying a new car instead of repairing an old one. Many students would also like to produce a high grade point average, work at a part-time job, and enjoy an active social life, but cannot achieve all of these due to time constraints.

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