What do economists mean by scarcity? Can you think of anything that is not scarce according to t

What do economists mean by scarcity? Can you think of...

Key Concepts

Scarcity

In economics, scarcity refers to the fundamental problem that resources (such as time, money, labor, and raw materials) are limited while human wants and needs are virtually unlimited. This mismatch forces individuals, firms, and governments to make choices about how best to use limited resources to meet competing demands, leading to trade-offs and opportunity costs.

Free Goods

Free goods are those that are not scarce because they are available in abundance and do not incur an opportunity cost when consumed. Examples often cited include naturally abundant resources like air in many contexts, though practical considerations (such as pollution) can complicate this ideal status in real-world scenarios.

Transcript

00:01 This question is asking us, what is meant by the term scarcity and are the things that are not scarce? so when we consider economic goods, economic goods, as has been mentioned previously, you know, coming into the terms of supply and demand, every good has a price, p, that someone is going to buy it for, and the supplier is going to make q of those goods.

00:28 So these are called the equilibrium price and the equilibrium quantity.

00:32 Now, because these terms, we're talking about goods.

00:39 Do we have an unlimited amount of goods we're able to buy? well, the answer is no.

00:43 If it was, then we would be selling over here in the infinity.

00:48 But we're not because then what is demanded would be way less than what is supplied.

01:00 And what is supplied would be way more than what is demanded.

01:02 So therefore, we have a problem in economics.

01:05 We want everything.

01:08 We want as many goods as we can possibly get.

01:11 When you consider the production's possibilities frontier, we want as many of everything as we can get.

01:19 However, we're not able to do that because we have a limited amount of money.

01:23 So scarcity can be defined as limits.

01:27 Just write this out.

01:29 Sorry, my handwriting skills are not that good, and it's transferring to the keyboard.

01:34 So it's limits on our ability to purchase things.

01:39 So when we consider the production's possibilities frontier, we can't have, we can't be right here because we don't make enough money to be on this point.

01:49 Like let's say we're buying oranges and apples.

01:53 So if we were buying oranges and apples and i, you know, this is let's say 10 oranges, by that down, and this is six apples...

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