Scarcity and Abundance

What is Economics? Body of knowledge that can help you analyze, explain and predict economic behavior. This behavior is centered around the basic economic problem of scarcity.

Definitions of Scarcity 1. Unlimited wants + limited resources= scarcity ◦A situation in which human wants are greater than the capacity of available resources to provide for those wants. 2. A situation in which a resource has more than one valuable use.

Teachers assign unnecessary homework to their classes, not recognizing that the students have many assignments from many classes. The teachers do not bear the cost of the assignment overload, so they may neglect to take scarcity into account when they assign students their homework. Behavior in these cases often leads to waste and poor use of the resources.

What is scarce? TIME!

Land used as a site for new school buildings was once prime wildlife habitat. The people designing the school had no interest in wildlife, so to them there was no cost in using the land for construction of a school. Behavior in these cases often leads to waste and poor use of the resources.

What is scarce? Land!

Rationale In these two situations, the people involved do not personally find the resources to be scarce. Behavior in these cases often leads to waste and poor use of the resource.