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Economic Scarcity

The concept of scarcity is essential to the field of economics. A resource is considered scarce when its availability is not enough to meet its demand. Scarcity is based on the idea that oftentimes a limited supply of goods or services comes up against an ever increasing demand for it and that, as such, every effort must be made to ensure its proper utilization and distribution so as to avoid inefficiency. Most goods and services can be definable as scarce since individuals desire more of them than they already possess (scarcity is maintained by demand). Those that are readily abundant are referred to as free goods.

The scarcity of goods and services is brought about by factors such as the limited supply of resources (for example, water, land or people) and the limited capabilities of technology or human skill (for example, those needed for enhanced production). Sometimes the insufficiencies are a result of poor planning and execution. In such cases, the scarcity is considered artificial.

Scarcity is managed by making choices regarding value so that individuals can exchange resources in a system of trade. In ideal circumstances, pricing systems adjust accordingly, thereby maintaining the balance of supply and demand. Certain things require scarcity to maintain value, as is the case, for example, with diamonds, awards, even the money produced by central banks.

Web Resources On Economic Scarcity

The Misconception of Scarcity
Wikipedia: Scarcity

Book Resources On Economic Scarcity

Scarcity, Conflicts, and Cooperation: Essays in the Political and Institutional Economics of Development by Pranab Bardhan
Essentials of Economics by Bradley R. Schiller

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