Definition
- Scarcity
- Scarcity means that human wants for goods, services and resources exceed what is available to satisfy them.
- Not to be confused with: Shortage
- A shortage exists when, at the going price, the quantity of a good demanded exceeds the quantity supplied.
Example
Can you think of two things a sixth-former has to choose between this week?
A sixth-former has £30 left this week and a free Saturday. The money can buy a concert ticket or go towards new trainers; the Saturday can go on a paid shift or on revision. She cannot have both of either pair. A millionaire faces the same Saturday: more money widens what can be bought, and still adds no hours to the day.
Test yourself
What is the difference between scarcity and shortage?
Scarcity is permanent and applies to everything that uses resources; a shortage is one market at one price and a higher price clears it.