Scarcity and Abundance

Scarcity A situation in which human wants are greater than the capacity of available resources to provide for those wants. A situation in which a resource has more than one valuable use.

SCARCITY = WANTS > AVAILABLE RESOURCES Equation for Scarcity SCARCITY = WANTS > AVAILABLE RESOURCES

Old economic textbooks collected in a bookcase near the teacher’s desk with a sign that says “Free books, take as many as you want!” The books have been there for three years.

(No alternative valuable use) Not Scarce (No alternative valuable use)

Old economics textbooks collected in a bookcase near the teacher’s desk with a sign that says “Free books, take as many as you want!” Another sign posted in the hallway says “$10 paid for any recycled textbook. Bring books to the principal’s office.”

(The books may be read or they may be recycled. Two valuable uses). Scarce (The books may be read or they may be recycled. Two valuable uses).

One economics textbook, five students who wish to do well in the economics course, and an important test the next day.

Scarce (The one book could be used by five different people; it has valuable alternative uses).

One economics textbook, and five students who are not taking economics, and an important test in the economics class the next day.

Not Scarce (Same number relationships, but the information in the book is not valuable to the five students).

Petroleum in Japan, a country without it’s own oil fields and without oil reserves.

Scarce (Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in the countries. Several valuable uses).

Petroleum in Saudi Arabia, a country with many oil fields and oil reserves.

Scarce (Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in other countries. Several valuable uses).

Water fountains in Rome flow continuously with water carried by viaducts from the Italian mountains. People in Rome quench their thirst by drinking from these fountains. But most of the water flows into the street and down the drains to a river that passes through the city.

Scarce -Treated as not scarce (The water has other valuable uses such as irrigation or sewer treatment).

At closing time, restaurants in the United States are required to throw away all uneaten food. To meet health standards for food preparation and the safety consumers, the food cannot be stored for use the next day. Also, the law prohibits restaurant employees from giving the food to the poor or dispersing it to local food banks.

Scarce -Treated as not scarce (The food could feed hungry people, it could be stored for future consumption; or it can be used as compost to improve soil conditions in gardens).

Oxygen is taken from the air and stored in containers Oxygen is taken from the air and stored in containers. When divers wish to stay underwater for long periods of time , they purchase container-stored oxygen and breathe from it during their underwater activities

A difficult example because oxygen in the air around us is not scarce A difficult example because oxygen in the air around us is not scarce. People routinely acquire it at no cost. There is more of it than individuals can use. But, underwater, it is scarce, as are the resources needed to capture oxygen and store it for underwater use. So container-stored oxygen is scarce.

Pebbles are taken from a beach to build a walk-way in a homeowner’s lawn. No one else wants the pebbles. The pebbles are not necessary for the lake’s ecosystem or animal habitat.

Not Scarce (The pebbles have no valuable alternative use. The resources necessary to move the pebbles. [Time & pebbles for example, are scarce]. They could be used for other valuable purposes).

A farmer has a water irrigation contract that requires the water user to use the entire allocation of water to water crops, whether or not the water is needed for crop irrigation. If the farmer does not use all the water, he or she will receive a smaller allocation next year.

Scarce -Treated as not scarce (The farmer is prohibited from considering other valuable uses for the water).