ScarcityScarcityA situation in which human wants are A situation in which human wants are

greater than the capacity of available greater than the capacity of available resources to provide for those wants.resources to provide for those wants.

A situation in which a resource has A situation in which a resource has more than one valuable use.more than one valuable use.

Equation for ScarcityEquation for Scarcity

SCARCITY =SCARCITY =

WANTS > AVAILABLE WANTS > AVAILABLE RESOURCESRESOURCES

Old economic textbooks collected in Old economic textbooks collected in a bookcase near the teacher’s desk a bookcase near the teacher’s desk with a sign that says with a sign that says “Free books, “Free books, take as many as you want!”take as many as you want!” The The books have been there for three books have been there for three years.years.

Not ScarceNot Scarce(No alternative valuable use)(No alternative valuable use)

Old economics textbooks collected in a Old economics textbooks collected in a bookcase near the teacher’s desk with a bookcase near the teacher’s desk with a sign that says sign that says “Free books, take as many “Free books, take as many as you want!”as you want!” Another sign posted in the Another sign posted in the hallway says hallway says “$10 paid for any recycled “$10 paid for any recycled textbook. Bring books to the principal’s textbook. Bring books to the principal’s office.”office.”

ScarceScarce(The books may be read or they may (The books may be read or they may

be recycled. Two valuable uses).be recycled. Two valuable uses).

One economics textbook, five One economics textbook, five students who wish to do well in students who wish to do well in the economics course, and an the economics course, and an important test the next day.important test the next day.

ScarceScarce(The one book could be used by (The one book could be used by

five different people; it has five different people; it has valuable alternative uses).valuable alternative uses).

One economics textbook, and One economics textbook, and five students who are not five students who are not taking economics, and an taking economics, and an important test in the important test in the economics class the next day.economics class the next day.

Not ScarceNot Scarce (Same number relationships, but the information in the (Same number relationships, but the information in the

book is not valuable to the five students).book is not valuable to the five students).

Petroleum in Japan, a country without it’s Petroleum in Japan, a country without it’s own oil fields and without oil reserves.own oil fields and without oil reserves.

ScarceScarce (Petroleum has many valuable uses in Saudi Arabia, and (Petroleum has many valuable uses in Saudi Arabia, and

it can be sold to other people in the countries. Several it can be sold to other people in the countries. Several valuable uses).valuable uses).

Petroleum in Saudi Arabia, a country with Petroleum in Saudi Arabia, a country with many oil fields and oil reserves. many oil fields and oil reserves.

ScarceScarce(Petroleum has many valuable uses in Saudi Arabia, and (Petroleum has many valuable uses in Saudi Arabia, and it can be sold to other people in other countries. Several it can be sold to other people in other countries. Several

valuable uses). valuable uses).

Water fountains in Rome flow continuously Water fountains in Rome flow continuously with water carried by viaducts from the with water carried by viaducts from the Italian mountains. People in Rome Italian mountains. People in Rome quench their thirst by drinking from these quench their thirst by drinking from these fountains. But most of the water flows into fountains. But most of the water flows into the street and down the drains to a river the street and down the drains to a river that passes through the city. that passes through the city.

ScarceScarce-Treated as not scarce-Treated as not scarce

(The water has other valuable uses such as (The water has other valuable uses such as irrigation or sewer treatment).irrigation or sewer treatment).

At closing time, restaurants in the United At closing time, restaurants in the United States are required to throw away all States are required to throw away all uneaten food. To meet health standards uneaten food. To meet health standards for food preparation and the safety for food preparation and the safety consumers, the food cannot be stored for consumers, the food cannot be stored for use the next day. Also, the law prohibits use the next day. Also, the law prohibits restaurant employees from giving the food restaurant employees from giving the food to the poor or dispersing it to local food to the poor or dispersing it to local food banks. banks.

ScarceScarce-Treated as not scarce-Treated as not scarce

(The food could feed hungry people, it could be stored for (The food could feed hungry people, it could be stored for future consumption; or it can be used as compost to future consumption; or it can be used as compost to

improve soil conditions in gardens).improve soil conditions in gardens).

Oxygen is taken from the air and stored in Oxygen is taken from the air and stored in containers. When divers wish to stay containers. When divers wish to stay underwater for long periods of time , they underwater for long periods of time , they purchase container-stored oxygen and purchase container-stored oxygen and breathe from it during their underwater breathe from it during their underwater activitiesactivities

A difficult example because oxygen in the A difficult example because oxygen in the air around us is not scarce. People air around us is not scarce. People routinely acquire it at no cost. There is routinely acquire it at no cost. There is more of it than individuals can use. But, more of it than individuals can use. But, underwater, it is scarce, as are the underwater, it is scarce, as are the resources needed to capture oxygen and resources needed to capture oxygen and store it for underwater use. So container-store it for underwater use. So container-stored oxygen is scarce.stored oxygen is scarce.

Pebbles are taken from a beach to build a Pebbles are taken from a beach to build a walk-way in a homeowner’s lawn. No one walk-way in a homeowner’s lawn. No one else wants the pebbles. The pebbles are else wants the pebbles. The pebbles are not necessary for the lake’s ecosystem or not necessary for the lake’s ecosystem or animal habitat. animal habitat.

Not ScarceNot Scarce(The pebbles have no valuable alternative use. The resources (The pebbles have no valuable alternative use. The resources necessary to move the pebbles. [Time & pebbles for example, are necessary to move the pebbles. [Time & pebbles for example, are

scarce]. They could be used for other valuable purposes). scarce]. They could be used for other valuable purposes).

A farmer has a water irrigation contract A farmer has a water irrigation contract that requires the water user to use the that requires the water user to use the entire allocation of water to water crops, entire allocation of water to water crops, whether or not the water is needed for whether or not the water is needed for crop irrigation. If the farmer does not use crop irrigation. If the farmer does not use all the water, he or she will receive a all the water, he or she will receive a smaller allocation next year.smaller allocation next year.

ScarceScarce-Treated as not scarce-Treated as not scarce

(The farmer is prohibited from considering other valuable (The farmer is prohibited from considering other valuable uses for the water).uses for the water).