Changes

==Scarcity==

==Scarcity==

“Scarcity” in economics refers to anything that is not free: it is anything that costs at least something to obtain.  Air is not scarce, but almost everything else is "scarce" in economics because it costs money.  There is a scarcity of gasoline, for example.  Gas costs money because its supply in refined form is limited, and the high demand for the limited supply drives up its price.  Drinking water is scarce also in some areas of the world, such as western states like Arizona and California.

The term “scarcity” in economics refers to anything that is not free.  If a good or service costs something, even if only a penny, then it is "scarce" in economic terminology.  Almost every good or service you can think of is "scarce" for the purposes of economics.  There is a scarcity of gasoline, for example.  Gas costs money because its supply (in refined form) is limited, and the high demand for the limited supply drives up its price.  Drinking water is scarce also in some areas of the world, such as western states like Arizona and California.  It is difficult to think of goods or services that are not "scarce" in economics.  Air is an example of something that is not scarce.  It does not cost money, not even a penny, to benefit from air.  Its supply far exceeds the demand.

Economics studies "scarce" goods and services, which is almost everything.  Economists would say that television shows are scarce, while most of us would not ordinarily say that.  Economists would say that junk food is scarce, while most of us would say there is too much it.  Economists would say that fatty foods are scarce, even though that sounds odd.  All these things cost money, and are not free (in the case of television, the "cost" to viewers includes the time they have to waste watching advertisements).

Economics is about "scarce" goods and services, which is almost everything.  Economists would say that television shows are scarce, while most of us would not ordinarily say that.  Economists would say that junk food is scarce, while most of us would say there is too much it.  Economists would say that fatty foods are scarce, even though that sounds odd.  All these things cost money, and are not free (in the case of television, the "cost" to viewers includes the time they have to waste watching advertisements).

The reason for the broad definition of scarcity in economics is to include any good or service that can be bought and sold.  If an item is so plentiful that everyone’s needs are fully satisfied, then there is no market to buy or sell it (e.g., air).  Once a price can be put on a scarce good or service, then some are not willing to pay for it.  Often people will not be able to obtain all of the good or service that they want.  They may be better off without it (e.g., fatty desserts at restaurants), but economists don’t care how scarcity may make people better off.

The reason for the broad definition of scarcity in economics is to include any good or service that can be bought and sold.  If an item is so plentiful that everyone’s needs are fully satisfied, then there is no market to buy or sell it (e.g., air).  Once a price can be put on a scarce good or service, then some are not willing to pay for it.  Often people will not be able to obtain all of the good or service that they want.  They may be better off without it (e.g., fatty desserts at restaurants), but economists don’t care how scarcity may make people better off.

Goods that no one wants are not scarce.  For example, a new deodorant that smells like a skunk would not be a scarce good.  You could charge nothing for it and your supply would still far exceed demand.  Toothpaste that turns your teeth yellow would not be scarce either.  How about hairspray that makes your hair fall out?  If the price of the good is always and truly free, like air, then it is not scarce.

Goods that no one wants (i.e., there is no demand for them) are not scarce.  For example, a new deodorant that smells like a skunk would not be a scarce good.  You could charge nothing for it and your supply would still far exceed demand.  Toothpaste that turns your teeth yellow would not be scarce either.  How about hairspray that makes your hair fall out?  If the price of the good is always and truly free, like air, then it is not scarce.  Can you define “scarcity” now in just four words?  Here we go: scarcity consists of “wants greater than means.”  If the "means" (availability) is greater than the the "wants" (demand), then the good is free and it is not scarce.  No one would pay anything, not even a penny, for it.

Based on our definition of scarcity, we can now refine our definition of “economics”.  “Economics” is the study of ''scarcity'', especially as it relates to goods and services.  If there is no scarcity, then everyone has what they want.  There is no scarcity of air, so economics does not study the everyday uses of air.  But there is a scarcity of land and oil, so we do study how they are bought and sold.

Based on our understanding of scarcity, we can now refine our definition of “economics”.  “Economics” is the study of ''scarcity''.  If there is no scarcity, then everyone has what they want.  There is no scarcity of air, so economics does not study the everyday uses of air.  But there is a scarcity of land and oil, so we do study how they are bought and sold.

 

There was a famous bet made in 1980 after the liberal Paul Ehrlich claimed that an increase in world population would cause greater scarcity in basic natural resources, such as copper, chromium, nickel, tin, and tungsten.  A "classical" (conservative) economist, Julian Simon, predicted that people would seek and find substitutes for scarce resources, such as other materials, and that this would prevent greater scarcity and higher prices.  The wager was that the liberal Ehrlich predicted that the price of these metals (also called "commodities") copper, chromium, nickel, tin, and tungsten would increase in price by 1990; the conservative Simon predicted their prices would not increase.

There was a famous bet made in 1980 after the liberal Paul Ehrlich claimed that an increase in world population would cause greater scarcity in basic natural resources, such as copper, chromium, nickel, tin, and tungsten.  A "classical" (conservative) economist, Julian Simon, predicted that people would seek and find substitutes for scarce resources, such as other materials, and that this would prevent greater scarcity and higher prices.  The wager was that the liberal Ehrlich predicted that the price of these metals (also called "commodities") copper, chromium, nickel, tin, and tungsten would increase in price by 1990; the conservative Simon predicted their prices would not increase.