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What Is Economics Scarcity - YouTube
Channel: ALTU
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what is scarcity
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by jim chappello scarcity refers to the
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basic economic problem
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the gap between limited that is scarce
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resources and theoretically limitless
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wants
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this situation requires people to make
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decisions about how to allocate
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resources efficiently
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in order to satisfy basic needs and as
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many additional wants as possible
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any resource that has a non-zero cost to
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consume is scarce to some degree
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but what matters in practice is relative
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scarcity
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scarcity is also referred to as paucity
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key takeaways scarcity is when the means
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to fulfill ends are limited and costly
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scarcity is the foundation of the
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essential problem of economics
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the allocation of limited means to
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fulfill unlimited wants and needs
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even free natural resources can become
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scarce if costs arise in obtaining or
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consuming them
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or if consumer demand for previously
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unwanted resources increases due to
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changing preferences or newly discovered
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use
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scarcity explained in his 1932 essay on
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the nature and significance of economic
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science
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british economist lionel robbins defined
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the discipline in terms of scarcity
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economics is the science which studies
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human behavior
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as a relationship between ends and
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scarce mean
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means which have alternative uses in a
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hypothetical world in which every
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resource water
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hand soap expert translations of hittite
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inscriptions
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enriched uranium organic bok choy time
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was abundant
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economists would have nothing to study
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there would be no need to make decisions
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about how to allocate resources
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and no trade-offs to explore and
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quantify
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in the real world on the other hand
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everything cost something
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in other words every resource is to some
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degree scarce
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money and time are quite essentially
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scarce resources
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most people have too little of one the
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other or both
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an unemployed person may have an
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abundance of time but find it hard to
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pay rent
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a hot shot executive on the other hand
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may be financially capable of retiring
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on a whim
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yet be forced to eat 10 minute lunches
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and sleep four hours a night
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a third category has little time or
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money
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people with abundant money and abundant
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time are seldom observed in the wild
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the concept of natural resource scarcity
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natural resources can fall outside the
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realm of scarcity for two reasons
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anything available in practically
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infinity supply that can be consumed at
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zero cost or trade off of other goods is
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not scarce
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alternatively if consumers are
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indifferent to a resource
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and do not have any desire to consume it
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or are unaware of it
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or its potential use entirely then it is
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not scarce even if the total amount in
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existence is clearly limited
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however even resources take for granted
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as infinitely abundant
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and which are free in dollar terms can
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become scarce in some sense
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take air for example from an
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individual's perspective
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breathing is completely free yet there
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are a number of costs associated with
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the activity
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it requires breathable air which has
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become increasingly difficult to take
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for granted since the industrial
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revolution
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in a number of cities today poor air
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quality has been associated with high
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rates of disease and death
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in order to avoid these costly affairs
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and assure that citizens can breathe
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safely
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governments or utilities must invest in
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methods of power generation that do not
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create harmful emissions
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these may be more expensive than dirtier
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methods but even if they are not
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they require massive capital
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expenditures
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these costs fall on the citizens in one
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way or another
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breathing freely in other words is not
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free
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if a government decides to allocate
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resources to making the air clean enough
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to breathe
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a number of questions arise what methods
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exist to improve air quality
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which are the most effective in the
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short term medium term and long term
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what about cost effectiveness what
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should be the balance between
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quality and cost what trade-offs come
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with various courses of action
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where should the money come from should
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the government raise taxes and if so
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on what and for whom will the government
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borrow
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will it print money how will the
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government keep track of its costs
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debts and the benefits that accrue from
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the project
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pretty soon the scarcity of clean air
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the fact that clean air has a non-zero
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cost
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brings up a vast array of questions
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about how to efficiently allocate
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resources
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scarcity is the basic problem that gives
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rise to economics
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