SCARCITY

Term Paper in Economics

Submitted by: (Student’s Name)

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Submitted to: (Teacher’s Name)

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 Table of Contents
Page
Introduction ……………………………………. 3
Main Body……………………………………… 4-7

What Does Scarcity Mean in Economics?

What Are the Main Causes of Scarcity?
The Difference Between Relative Scarcity and Absolute
Scarcity
Modern concepts of scarcity
Scarce goods
Non scarce goods
Examples of scarcity in economics and natural resources

Conclusion…………………………………….. 8

Bibliography………………………………….. 9

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Introduction
Scarcity as an economic term "refers to the fundamental truth of existence that
there exists only a finite number of human and nonhuman resources that the
finest technical knowledge is capable of exploiting to generate only restricted
maximum amounts of each economic product." In simple words scarcity is the gap
between limited resources and theoretically limitless wants.
Here is an example:

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 What Does Scarcity Mean in Economics?
Scarcity in economics refers to when the demand for a resource exceeds the
supply of that resource due to limited supplies. Scarcity forces customers to make
judgments about how to effectively use resources in order to meet all
fundamental necessities and as many wants as feasible.

What Are the Main Causes of Scarcity?

Economic scarcity has three basic causes: demand-induced, supply-induced, and
structural. When supply remains constant but demand increases, this is referred
to as demand induced. Supply-induced scarcity occurs when the supply of a
resource falls short of demand, whereas structural scarcity occurs when one
segment of a population does not have equal access to resources as another
segment of the population. Poor distribution of resources, personal perspective
on resources, a rapid increase in demand, and a rapid decrease in supply are all
potential scarcity causes.

the Difference Between Relative Scarcity and Absolute

Scarcity

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When a resource's availability is inherently restricted, this is referred to as relative
scarcity. This has nothing to do with a corporation not producing adequate
supplies, but rather with the fact that there are only a limited number of
resources accessible in the world. Relative scarcity, on the other hand, relates to
supply in proportion to demand. Take, for example, oil. Though there is an excess
of oil right now, there is a finite amount accessible that will not be able to fulfill
demand at some time. It is scarce in comparison.
Absolute scarcity describes a resource that is inherently restricted but not in
relation to demand. Time is the finest illustration of this. There are 24 hours in a
day, 7 days in a week, and 52 weeks in a year.

Modern concepts of scarcity

Scarcity denotes a disparity between finite resources and supposedly boundless

desires. Scarcity refers to the idea that there is never enough of anything to fulfill
all imaginable human desires, even at advanced levels of human technology.
Scarcity necessitates making a sacrifice—giving something up or making a
trade-off—in order to gain more of the desired limited resource.
Scarcity implies competition for scarce resources in the actual world, and
competition happens "when people seek to satisfy the criteria that are being
utilized to determine who gets what." The pricing system, often known as market
prices, is one method for allocating limited resources. "If a society organizes
economic strategies based on desire to pay money, its members will strive to
compete to generate money." We would anticipate competition in terms of those
other factors if other criteria were applied.
For example, while air is more valuable to humans than gold, it is less rare simply
because the cost of producing air is zero. Gold, on the other hand, has a high cost
of manufacturing. It must be discovered and processed, both of which take
significant resources. Furthermore, scarcity indicates that not all of society's aims
may be pursued concurrently; trade-offs are made between one purpose and
another. Lionel Robbins described economics in a seminal 1932 article as "the
discipline that analyses human behavior as a link between aims and scarce means

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that have alternative applications." Artificial scarcity can be established in
circumstances of monopoly or monopsony. Stockpiling can also cause scarcity,
either as an attempt to corner the market or for other causes. Panic purchasing
can generate and contribute to temporary shortage.

Scarce goods
A scarce good is one in which there is more demand than supply at a price of $0.
Scarcity refers to the possibility of conflict over the possession of a limited item.
One may argue that someone's ownership and control of a rare product excludes
someone else's control. Scarcity is classified into three types: demand-induced,
supply-induced, and structural.
Demand-induced scarcity occurs when the demand for a resource rises while the
supply remains constant. Supply-induced scarcity occurs when the supply is
insufficient in relation to the demand. This is mostly due to environmental
degradation, such as deforestation and drought. Finally, structural scarcity occurs
when a portion of a society does not have equitable access to resources owing to
political tensions or geographic location. This occurs in Africa when arid areas lack
access to water. They must travel and negotiate arrangements with nations that
have water resources to obtain the water. Political factions in certain nations hold
vital resources hostage in exchange for concessions or money. The most conflict in

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a country is caused by supply-induced and structural shortage demands for
resources.

Non scarce goods

There are non-scarce products on the other side of the coin. These items do not
have to be worthless, and some may even be necessary for one's survival.
According to Frank Fetter's Economic Principles: "Some items, even those that are
necessary for survival, may fail to be objects of desire and choice due to their
abundance. These are referred to as free commodities. They have no worth in the
way that the economist defines it. Free commodities are those that exist in excess;
that is, in amounts adequate not merely to fulfill but also to satisfy all of the wants
that may rely on them." When compared to scarce commodities, non-scarce
goods are those where there can be no dispute about ownership. The fact that
someone is utilizing something does not preclude others from doing so. To be
termed non-scarce, a good must have an unlimited existence, no sensation of
possession, or be indefinitely copied.

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 Conclusion
Scarcity refers to the inability of a society to meet all its citizens' desires owing to a
shortage of resources. Scarcity occurs when people's demands exceed their needs
for a product, resulting in something being rare owing to a lack of input. One of
the primary causes for something becoming rare is that individuals have excessive
demands and requirements. Scarcity, to a significant extent, may be defined as a
circumstance in which a society lacks the resources to provide all the commodities
and services required to satisfy all people's desires. There is no true answer to the
scarcity problem.
Land, labor, and money are the four most fundamental resources; additional
resources include energy, entrepreneurship, knowledge, expertise, management,
and time. Human effort, both physical and mental, is referred to as labor. All
human inventions utilized to generate goods and services are considered capital.
Natural resources comprise all of nature's offerings, such as bodies of water, trees,
oil reserves, mineral deposits, and even animals.
Resources are objects that can be turned into goods; they might be natural
resources like land and raw materials, human resources like labor, or
manufactured resources like oil. A rare or in limited supply resource can increase
the value of a product. Resources are items we require for daily existence in
today's culture since we have so many man-made objects and so many that are
powered by machines.

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 Let’s explore examples of scarcity in economics and natural
resources
During a pandemic, stockpiling of toilet paper and hand sanitizer disrupts the
supply chain, resulting in retail scarcity.

An especially devastating flu season motivates many more individuals to acquire

the flu vaccination the next year, but vaccine supply falls short of demand.

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Those who do not have access to clean water face a water scarcity.

An undereducated population in a country that requires highly qualified

professionals might lead to a labor shortage.

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 Bibliography

https://www.investopedia.com/terms/s/scarcity.asp

https://en.wikipedia.org/wiki/Scarcity

https://examples.yourdictionary.com/examples-of-scarcity.html

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