CandleFocus Glossary Editor
Scarcity, in economics, refers to the perpetual gap between finite resources and the overwhelmingly insatiable demands set by people. In a nutshell, it is a situation arising from limited resources and unlimited wants which results in the impossibility of satisfying all human wants simultaneously. It is a fact of life that no matter how hard one may try, it is practically impossible to satisfy all wants and needs.
Now, this inevitable gap between limited resources and unlimited wants has far reaching implications which push humankind to face tough decisions every day. Many of these decisions play a role in affecting the way people interact with each other and also what they actually get to consume in life.
Scarcity can be put into perspective in terms of money. People usually have to make difficult decisions when faced with a limited budget. Does one go for an expensive gadget or for a less desirable, but more essential, service? Do we buy an expensive car now or save the money for something in the future? A scenario like this is known as the ‘trade off’, or the conscious decision taken by an individual or allocating scarce resources to satisfy one specific want over the other.
Now, this concept of ‘trade off’ can also be extended to bigger picture, such as regulation policies, global collaboration and other such macro decisions. In this context, governments, public forums and heads of states would have to make tough decisions considering the limited resources at their disposal.
The idea of scarcity could also be used to refer to the reduction in the supply of a resource or product relative to demand over time. This could, for example, refer to the depletion of natural resources (like oil or water) due to over-exploitation.
In conclusion, the concept of scarcity is an inevitability in life, which highlights the importance of making the best out of what one has or is able to source. It represents a social conflict between humans and forces them to settle for a ‘trade-off’ resolution. Governmental level planning and policies take into account the idea of scarcity and relate to the resources available before any decision is taken.
Now, this inevitable gap between limited resources and unlimited wants has far reaching implications which push humankind to face tough decisions every day. Many of these decisions play a role in affecting the way people interact with each other and also what they actually get to consume in life.
Scarcity can be put into perspective in terms of money. People usually have to make difficult decisions when faced with a limited budget. Does one go for an expensive gadget or for a less desirable, but more essential, service? Do we buy an expensive car now or save the money for something in the future? A scenario like this is known as the ‘trade off’, or the conscious decision taken by an individual or allocating scarce resources to satisfy one specific want over the other.
Now, this concept of ‘trade off’ can also be extended to bigger picture, such as regulation policies, global collaboration and other such macro decisions. In this context, governments, public forums and heads of states would have to make tough decisions considering the limited resources at their disposal.
The idea of scarcity could also be used to refer to the reduction in the supply of a resource or product relative to demand over time. This could, for example, refer to the depletion of natural resources (like oil or water) due to over-exploitation.
In conclusion, the concept of scarcity is an inevitability in life, which highlights the importance of making the best out of what one has or is able to source. It represents a social conflict between humans and forces them to settle for a ‘trade-off’ resolution. Governmental level planning and policies take into account the idea of scarcity and relate to the resources available before any decision is taken.