Understanding Scarcity

1. What is scarcity?

It means finite or in layman term, limited in amount. All economic resources have this feature e.g. stocks of fish, oil reserves, lands that are suitable for farming, clean water supply, number of workers in a department, machines in a photocopy shop, money and even time. Time? Is that even possible? Yes and in this case is not about the time that you have throughout your lifetime but the 24 hours of a day in your life. There are days where we are so busy and we wish that we can have more than 24 hours so that we can get all important things done within the same day

2. What are the implications of scarcity?

a) As demand outweighs the supply, the price will rise. This explains why houses and fuel price are getting more and more expensive

b) Economic agents have to make a choice. Clearly it is not possible for the finite resources to fulfill all wants and desires. Once the decision is made, there will be an opportunity cost

c) Deprivation of lives. As prices will continue to increase, lower income households will be gradually priced out. In worst case scenario they may not even be able to get access to important resources like land to build houses or even water for consumption simply because there is none. Certain places in Sub Saharan Africa are so dry that it is even impossible to carry out farming and other economic activities