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SCARCITY AND SHORTAGE
What is scarcity?
According to Investopedia, scarcity is “ the basic economic problem, the gap between limited that
is, scarce resources and theoretically limitless wants. This situation requires people to decide how
to allocate resources efficiently to satisfy basic needs and as many additional wants as possible.
Scarcity is when the means to fulfill ends are limited and costly. Scarcity is the foundation of the
actual problem of economics: the allocation of limited means to fulfill unlimited wants and needs.
Even free natural resources can become scarce if costs arise in obtaining or consuming them, or if
consumer demand for previously unwanted resources increases due to changing preferences or
newly discovered uses.”
In addition to that, Investopedia further explains that “Money and time are quintessentially scarce
resources. Most people have too little of one, the other, or both. An unemployed person may have
an abundance of time but find it hard to pay rent. A hotshot executive, on the other hand, may be
financially capable of retiring on a whim, yet be forced to eat ten-minute lunches and sleep four
hours a night.”
What is the opportunity cost?
Tejvan Pettinger states that “Scarcity refers to resources being finite and limited. Scarcity means we
have to decide how and what to produce from these limited resources. It means there is a constant
opportunity cost involved in making economic decisions. Scarcity is one of the fundamental issues in
economics.” “Opportunity cost is the next best alternative foregone. The fundamental problem of
economics is the issue of scarcity. Therefore we are concerned with the optimal use and distribution
of these scarce resources. Wherever there is scarcity, we are forced to make choices. If we have PHP
200, we can spend it on an economic textbook or enjoy a restaurant meal. Therefore, many choices
involve an opportunity cost having to make choices between the two.”
What is the production possibilities frontier?
Tejvan Pettinger mentions that “A Production Possibility Frontier shows how much an economy can
produce given existing resources. A production possibility can show the different choices that an
economy faces. For example, when an economy produces on the PPF curve, increasing the output of
goods will have an opportunity cost of fewer services. One choice an economy faces is between
capital goods (investment) and consumer goods. If more resources are devoted to capital goods (e.g.,
building new factories), consumption will go down in the short term. However, if the investment is
successful, then, in the long run, productive capacity will increase, and the PPF curve will shift to the
right.”
Sources:
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Investopedia. (2021, January 16). Scarcity Definition.
https://www.investopedia.com/terms/s/scarcity.asp
Chen, J. (n.d.). Shortage Definition. Investopedia. https://www.investopedia.com/terms/s/shortage.asp
Pettinger, T. (2019, December 6). Opportunity Cost Definition. Economics Help.
https://www.economicshelp.org/blog/2177/economics/opportunity-cost-definition/
Pettinger, T. (2019a, March 16). Production Possibility Frontier. Economics Help.
https://www.economicshelp.org/microessays/ppf/

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SCARCITY AND SHORTAGE What is scarcity? According to Investopedia, scarcity is “ the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants. This situation requires people to decide how to allocate resources efficiently to satisfy basic needs and as many additional wants as possible. Scarcity is when the means to fulfill ends are limited and costly. Scarcity is the foundation of the actual problem of economics: the allocation of limited means to fulfill unlimited wants and needs. Even free natural resources can become scarce if costs arise in obtaining or consuming them, or if consumer demand for previously unwanted resources increases due to changing preferences or newly discovered uses.” In addition to that, Investopedia further explains that “Money and time are quintessentially scarce resources. Most people have too little of one, the other, or both. An unemployed person may have an abundance of time but find it hard to pay rent. A hotshot executive, on the other hand, may be financially capable of retiring on a whim, yet be forced to eat ten-minute lunches and sleep four hours a night.” What is the opportunity cost? Tejvan Pettinger states that “Scarcity refers to resources being finite and limited. Scarcity means we have to decide how and what to produce from these limited resources. It means there is a constant opportunity cost involved in making economic decisions. Scarcity is one of the fundamental issues in economics.” “Opportunity cost is the next best alternative foregone. The fundamental problem of economics is the issue of scarcity. Therefore we are concerned with the optimal use and distribution of these scarce resources. Wherever there is scarcity, we are forced to make choices. If we have PHP 200, we can spend it on an economic textbook or enjoy a restaurant meal. Therefore, many choices involve an opportunity cost – having to make choices between the two.” What is the production possibilities frontier? Tejvan Pettinger mentions that “A Production Possibility Frontier shows how much an economy can produce given existing resources. A production possibility can show the different choices that an economy faces. For example, when an economy produces on the PPF curve, increasing the output of goods will have an opportunity cost of fewer services. One choice an economy faces is between capital goods (investment) and consumer goods. If more resources are devoted to capital goods (e.g., building new factories), consumption will go down in the short term. However, if the investment is successful, then, in the long run, productive capacity will increase, and the PPF curve will shift to the right.” Sources: ● ● ● ● Investopedia. (2021, January 16). Scarcity Definition. https://www.investopedia.com/terms/s/scarcity.asp Chen, J. (n.d.). Shortage Definition. Investopedia. https://www.investopedia.com/terms/s/shortage.asp Pettinger, T. (2019, December 6). Opportunity Cost Definition. Economics Help. https://www.economicshelp.org/blog/2177/economics/opportunity-cost-definition/ Pettinger, T. (2019a, March 16). Production Possibility Frontier. Economics Help. https://www.economicshelp.org/microessays/ppf/ Name: Description: ...
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