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Basic Economics: Scarcity and Choices

More of this Feature

• Part 2: Scarcity and Choices

Related Resources

• Basic Economics: Want vs. Need • Basic Economics: Supply and Demand • Basic Economics: Interdependence • Economics

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Part 1: Scarcity

Think of a thing that you like to have. What would your life be like if you suddenly couldn't get any more of it?

You might have a favorite hobby, like collecting toys or reading Harry Potter books. You might have a favorite food, like ice cream or a special kind of bread. What would you do if your favorite toys or books were no longer available? What if you couldn't get ice cream or your favorite bread anywhere?

People deal with this kind of problem every day. It's called scarcity. It comes from the word scarce, which means there isn't a lot of it or it isn't always available.

Some fruits and vegetables are scarce in markets sometimes because those fruits or vegetables grow only at certain times of the year. Because the supply of fruits and vegetables is lower, there is a better chance that those fruits and vegetables will be scarce, or not always available. You may find that the market has no strawberries at all. Why? Either no shipments of strawberries came in, or so few strawberries came in that by the time you got there, they were all gone.

What does this mean for the demand of strawberries? If enough people want strawberries when none are available, then the demand is quite high. And the demand is high not because the price is low (as is usually the case) but because the supply is low.

An older person in your family can probably tell you about a time 30 years ago when there was a gasoline shortage. At that time, in the 1970s, gasoline was scarce. Many people wanted to buy it, but only a certain amount was available. This is a great example of scarcity: Wants are more than what is available. The supply was low. Because the demand was greater than the supply, the gasoline was scarce.

So how does scarcity relate to supply and demand? Scarcity is a measure of supply. If strawberries are scarce, then the supply of strawberries is low. And if many people want to buy strawberries when none are available, then demand is high because of a low supply caused by scarcity.

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