FUN - Scarcity Lesson

Scarcity

Economics is the study of choices. Everyone from individuals to businesses to governments have to make choice due to scarcity. Scarcity is a basic, permanent condition that exists because unlimited wants exceed limited productive resources. A shortage differs from scarcity because a shortage means goods are temporarily unavailable; a scarce resource may currently be available, once it is gone, it is gone. In order for a resource to be scarce it must be limited, desirable, and have multiple uses.

Some example of scarce resources are time, money, land, trees, education, food, and fresh drinking water. Goods we do not want, such as garbage or goods we cannot easily use like salt water are not considered scarce. Other examples of goods that are not scarce are sewage and toxic waste.

The map below shows the scarcity of water around the globe.

Allocating Scarce Resources

Since resources are scarce, people have to figure out ways to allocate them. Some strategies for allocating scarce resources are price, majority rule, contests, force, sharing, lottery, authority, first-come-first-served, and personal characteristics. Let’s look closer at them below.

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