Changes

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).

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.  Some people will not be willing to pay the cost of a good or service that they would want for free.  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 (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.

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, then it is not scarce.   

 

Based on the above, 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 "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 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.

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.