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| | ==Scarcity== | | ==Scarcity== |
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| − | “Scarcity” is when the available good or service is not enough to satisfy everyone’s needs or wants. There is a scarcity of oil and gasoline, for example. Gas is expensive because there is not enough easily available to completely satisfy everyone’s desire for it in fueling their cars and supplying their other energy needs. Drinking water is scarce also, and more scarce in western states like Arizona and California. | + | “Scarcity” is when the available good or service is not enough to satisfy everyone’s needs or wants. There is a scarcity of oil and gasoline, for example. Gas is expensive because there is not enough easily available to completely satisfy everyone’s desire for it in fueling their cars and supplying their other energy needs. Drinking water is scarce also in some areas of the world. Drinking water is more scarce in western states like Arizona and California than in northeastern states like New Jersey, where there are many wells. |
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| − | Note that the economic definition of scarcity includes far more goods than the ordinary meaning of the term. Economists would say that television shows are scarce, while most of us would not ordinarily say that. Economists would say that beer 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. | + | Note that the economic definition of scarcity includes nearly all types of goods and services. 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. |
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| − | 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 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 will not be willing or able to afford it. Often people will not be able to obtain all of the good or service that they want. They may be better off without (e.g., fatty desserts at restaurants), though economists don’t address how we are better off with scarcity sometimes. | + | 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 will not be 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 (e.g., fatty desserts at restaurants), though economists don’t address how we are better off because of scarcity sometimes. |
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| | “The best things in life are free!” True, but even free things can be considered scarce. If the New Yankees gave away some free tickets to a World Series game, they would still be very scarce. People would wait for days in line to get a chance to grab those tickets. However, many other items of great value are not scarce. There is no scarcity of prayer, for example. It’s available to anyone at any time without charge. Exercise, in some form, is not scarce either. But many types of exercise are scarce, such as memberships in a health club. | | “The best things in life are free!” True, but even free things can be considered scarce. If the New Yankees gave away some free tickets to a World Series game, they would still be very scarce. People would wait for days in line to get a chance to grab those tickets. However, many other items of great value are not scarce. There is no scarcity of prayer, for example. It’s available to anyone at any time without charge. Exercise, in some form, is not scarce either. But many types of exercise are scarce, such as memberships in a health club. |
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| | 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 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? | | 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 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? |
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| − | Based on our definition of scarcity, we can now refine our definition of “economics”. “Economics” is the study of the purchase and sale of goods and services when there is scarcity. If there is no scarcity, then everyone has what they want. For example, 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 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. For example, 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, along with everything else that is bought and sold. |
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| − | In fours words, “scarcity” consists of “wants greater than means.”
| + | Can you define “scarcity” now in just four words? Here we go: scarcity consists of “wants greater than means.” |
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| | ==Transaction Costs== | | ==Transaction Costs== |