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Scarcity

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Title: Scarcity  
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Subject: Economics, Microeconomics, Simon–Ehrlich wager, Inflation, Cost–benefit analysis
Collection: Economics Terminology, Scarcity, Value Theory
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Scarcity

Map of the global distribution of economic and physical water scarcity as of 2006

Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. A common misconception on scarcity is that an item has to be important for it to be scarce. This is not true, for something to be scarce, it has to be hard to obtain, hard to create, or both. Simply put, the production cost of something determines if it is scarce or not. For example, although air is more important to us than diamonds, it is cheaper simply because the production cost of air is zero. Diamonds on the other hand have a high production cost. They have to be found and processed, both of which require a great deal of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one good against others. In an influential 1932 essay, Lionel Robbins defined economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."[1]

In biology, scarcity can refer to the uncommonness or rarity of certain species. Such species are often protected by local, national or international law in order to prevent extinction.

See also

Notes

  1. ^ Robbins, Lionel (2014) [1932]. An Essay on the Nature and Significance of Economic Science (2nd ed.). London: Macmillan. p. 16. 

References

  • Milgate, Murray (March 2008). "goods and commodities". In Steven N. Durlauf and Lawrence E. Blume. The New Palgrave Dictionary of Economics (2nd ed.). Palgrave Macmillan. pp. 546–48.  
  • Montani, Guido (1987). "Scarcity". In Eatwell, J. Millgate, M., Newman, P. The New Palgrave. A Dictionary of Economics 4. Palgrave, Houndsmill. pp. 253–54. 
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