What is scarcity? What makes scarcity so important in today’s economy? By definition we know scarcity simply means there are unlimited human wants which are met by limited resources. We have learned that economics is basically the study of choice, and we have also learned that scarcity brings along the ability to have a choice. So in essence without scarcity we would have no choice, which would basically mean there would be no economy. So we see now how important scarcity really is to our economy and to our ability to have choice.
So how does scarcity affect our lives in a real world situation? If we were to take our natural resources for example, we find the most used are that of oil, land, water, and time. These elements are found to be some of the most ...view middle of the document...
My other option would be to wait until the next day, but then I stand the chance of losing the business because the order was for one thousand and two hundred for that day. So in my opinion the opportunity costs in this case would be having to choose between making money and being with my family. Either way my decision is going to have an impact on my life.
When we think of how much people desire to have certain things and the fact there just is not enough to go around, we have to figure out how to determine who eventually gets what they want. In order to do this we need a rationing device in place. And in this particular case I believe the placing of a dollar amount on each product. For example, I have 100 cups available at my shaved ice stand and everyone wants to get their hands on one of my delicious flavored shaved ice. How do I decide who gets one and who does not? The answer is simple, I use the rationing device we came up with, which is placing a dollar amount on each cup. So eventually only those who had the money to pay the “dollar amount” required are able to get their shaved ice fix.
As we look at the implantation of the rationing device, we find that competition follows right along with it. In the scenario stated above, we find when a dollar price is placed as the rationing device those who did not have enough to get what they wanted will go out and compete to earn more money. I am a living example once again of this form of competition. In order to obtain that high paying job, I am now having to compete with those young college graduates.