Scarcity

 

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Product Code: KEP-103

Because productive resources are limited, the goods and services that can be produced from these resources are also limited.  In contrast, the goods and services wanted by individuals and societies are virtually unlimited.  This tension between unlimited wants and limited productive resources available for satisfying these wants is what economists refer to as scarcity. Thus, stereos, hot dogs, education, lawn mowers, T.V. repair services, and bubble gum are all considered scarce because many individuals desire these things, but their availability is limited.

Scarce goods and services command a price in the marketplace. The price indicates how scarce a good or service is relative to other goods and services. A good with a high price is relatively more scarce than a good with a lower price; thus a stereo is considered more scarce than a piece of bubble gum. Economically speaking, it is quite difficult to think of things that are not scarce.  Some examples might include sand and water at the beach or the air you are breathing at this moment. But even air is scarce to the scuba diver or astronaut; and certainly clean air is scarce for the inhabitants living in cities. It is safe to say that in economics, most things in this world are considered scarce.

Scarcity is sometimes confusing to students because it does not correspond exactly to the common usage of the word. Are hot dogs and candy really scarce? They are readily available to most students, who would more likely apply the term to diamonds or gold. The key idea to point out to students is that hot dogs and candy are indeed scarce (they are not freely available and have a price), but they are less scarce than diamonds or gold.

Ideas & Standards

Understanding

Evaluating
Create a list of scarce goods, then a list of scarce services (or cut and paste pictures from magazines). Discuss and compare student lists. Then have students place estimated prices on the items in their lists. Discuss what the price represents (how scarce the good or service is relative to others).

Discuss different jobs. List special skills that are needed for these jobs. Discuss how these jobs make a worker scarcer and provide a higher wage.

Draw or cut out pictures of different kinds of natural resources. Discuss which of these are "very scarce." How do you know? (The price is high relative to the prices of the others.)

Applying
List scarcity situations students face every day in the use of their time. Draw these scarcity situations and create a bulletin board display.

Identify scarcity situations in the school or classroom. Explain that school decision-makers have limited funds, but almost unlimited uses for those funds (supplies, computers, teacher salaries, team uniforms, playground equipment, etc.).

Write a paragraph about a scarcity situation students faced when purchasing a specific good or service (choosing how to spend limited income on several desired items).

Creating
Create a poem or jingle about scarcity.

Analyzing
Analyze this statement: "If you want a good job, make yourself scarce!" (It's true. Making yourself "scarce" by acquiring valuable skills will make workers more valuable to employers.)

Use a resource map of the state to identify the scarce natural resources of certain regions.

Related Lessons
Herschel's World of Economics DVD

  • Lesson 4: Scarcity
  • Scarcity

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