Scarcity
Categories: Econ
Diamonds. Gold. Oil. Oscar-winning actors. Seven-foot-tall dudes who can hit three pointers under pressure. These things are scarce.
A handful of beach sand. A box of garbage. Theses things are not scarce.
But what does “scarcity” mean in economic terms?
Let’s back up a bit. Beep. Beep. Beep. The basic forces of economics are supply and demand. The fundamental pricing action in an economy lies in figuring out how to distribute limited resources. Basically, finding a way to get supply and demand into balance. So that’s the theory.
Example:
People want stuff, like hamburgers. They get hangry and need comfort food and/or fuel and/or calories masquerading as love. Joe 6-Pack wants his burger. Demands it. So, yes, that's demand. Then someone provides the stuff. Supplies it. Like Freddie the Fry Cook. And that's supply. In the middle, you get prices, which help match and meter and measure the metrics of scarcity, i.e. where supply hooks up with demand. Everything is relative, or contextual. A bottle of water in the middle of the desert can be worth a hundred bucks. That same bottle in Kauai, where it rains 5 inches a day? Eh, not worth so much.
So, in context, when there's a lot of supply and limited demand, prices are low. People might love hamburgers, but there are a lot of them around (a lot of supply, i.e. they aren’t scarce), and all of the ingredients to a burger are easy to find. There are plenty of sources of all-beef patties. Plenty of special sauce. Plenty of lettuce, cheese, pickles, and onions, and plenty of wheat and sesame seeds to make sesame seed buns. Tons of suppliers. Easy to make. Commodities. There's no significant scarcity of hamburgers, so prices are relatively low. There aren't infinite burgers, but compared to
amber with dinosaur blood in it, and Olympic gold medalists, and brilliant, honest Congressmen...hamburgers aren't really scarce.
So what is scarce? How about beachfront property? Ever wanted to live in a mansion in Malibu? One of those babies will likely set you back a cool $20 mil. Beachfront property in a good location is rare (supply is very limited), but everyone anywhere near the coasts wants to live there. There’s a huge demand for this scarce resource.
Now technically, not all beachfront property is expensive. Remember Three Mile Island? Easy pickings. But if you want to live by the beach in California, you’re going to have to pay up, competing with other rich people willing to shell out millions for a close-up view of Moby or Flipper or, well, smog. And note that what’s scarce today might not always be scarce, or even prized. Beachfront property in California won’t always be as rare global warming continues, or a random nuke hits Greenland.
That $20 million Malibu home? It used to be beachfront. Now it’s Atlantis. And not the cool kind, where you can swim with dolphins. Or the kind with superheroes. No, just bottom-of-the-ocean, formally-20-million-dollar fish habitat. Demand has dropped to zero. It’s no longer scarce. It’s as common as junk on the bottom of the ocean. Meanwhile, with California’s new coastline, land that used to be inland orange and walnut groves, now has a spectacular view of the ocean. Farmer McGee, how about $12 million for a couple acres by the coast?
Want a two-carat diamond ring for your brand-new wife? The one who doesn't nag you daily to take out the garbage? That ring's going to cost you about $50,000, because there aren’t many diamonds that big, i.e. they're scarce...and they are desired. Want Denzel in your movie? It’s going to cost you a cool $5 million. If you want KD playing on your hoops team? It’s going to cost you about a quarter Unit a season. Why? They're scarce, not like a hamburger, and they’re desired by many, especially the rich.
So these are today’s prices for the intersections of supply and demand. Tomorrow, prices will move, as attributed values are continually in flux. An item might be scarce, but that doesn’t make it worth a lot of money...not if demand is low. The Shmoop Family Singers album is scarce and, um, oh so not desired. There’s only one Steven Seagal. Yeah, the fat and bald guy who used to be somebody.
The values attributed to scarcity can go the other way, too. Something that used to be very common can become scarce, and if demand remained flat or steady, these now scarce but demanded things can become…prized.
So watch out, Denzel. You might be one-of-a-kind, but scarcity doesn’t always mean high value. You’re always just one hamburger addiction away from heading down the Steven Seagal path to oblivion. But on the other side of the coin, maybe put a burger into your deep freezer, just in case. Who knows if it will be scarce one day? If all the cows are wiped out by a plague...burgers might become a scarce resource.
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Econ: What is scarcity?71 Views
And finance Allah shmoop What is scarcity Oh diamonds gold
oil Oscar winning actors These things are scarce Well a
handful of beats sand a box of garbage An alley
cat You have things Things are not scarce But what
a scarcity even mean in economic terms All right let's
back up a bit Basic forces of economics supply and
demand Well the fundamental pricing action in an economy lies
in figuring out how to distribute Limited resource is basically
finding a way to get supplying two man in tow
balance Yeah remember that graph This one right here Supply
demand And here's why Base wife Right So that's the
theory Okay People want stuff like hamburgers They get angry
and need comfort food and or fuel and or calories
masquerading as love Joe six Pack wants his burger demands
it So yes that's demand And someone provides the stuff
like supplies it like Freddie the fry cook and that's
applied in the middle You get crisis which helped match
and meter and measure The metrics are of Scarcity III
where supply hooks up with demand Everything is relative or
contextual right A bottle of water in the middle The
desert can be worth a hundred bucks that same bottle
in Kawai Hawaii where it rains five inches a day
not so much so in contact When there's a lot
of supply and limited demand Prices are low People might
love hamburgers but there are a lot of them around
a lot of supply They aren't scarce and all the
ingredients to a burger well easy to find There are
plenty of sources of all beef patties special sauce lettuce
cheese pickles onions and plenty of wheat and you know
sesame seeds to make the sesame seed buns there Yet
tons of suppliers easy to make their called commodities a
good or service that's more less the same wherever you
biden in whatever form you receive it in But there's
no significant scarcity of hamburgers so prices are relatively low
in this sense There aren't infinite burgers but compared tto
amber with the dinosaur blood in it and Olympic gold
medalists and no brilliant honest Congress People Yeah Hamburgers aren't
really scare So what is scarce How about beachfront property
Everyone to live in a mansion in Malibu Yeah This
little baby will set you back a cool twenty mil
in this one eighty mil beachfront property in a good
location is rare supplies very limited But everyone anywhere near
the coast wants to live there There's huge demand for
this scarcely supplied resource Now technically not all beachfront property
is expensive but remember Three Mile Island you have this
thing easy pickings But if you want to live by
the beach in California without nuclear waste well you're going
to have to pay up competing with other rich people
willing to shell out millions and millions for a close
up view of movie your flipper or well smog And
note that what scarce today might not always be scarce
or even prized beachfront property in California won't always be
as rare if global warming continues There are a random
new kits Greenland and all that ice sheet melts Well
then here's the U S Map At that point the
ice sheets melted oceans have risen and you remember that
twenty million dollars Malibu home Well that used to be
beachfront Now it's Atlantis and not the cool kind where
you can swim with dolphins or the kind with superheroes
know just bottom of the ocean Formally twenty million dollars
fish habitat Yeah Demand has dropped to zero It's no
longer scarce It's as common as junk on the bottom
of the ocean Which basically is meanwhile with California's new
coastline will land that used to be inland orange and
walnut groves now has a spectacular view of the ocean
Farmer McGee Yeah How about twelve million dollars for a
couple of euro woman acres there by the coast Yeah
I think that one of two carat diamond ring for
your brand new wife Yeah The one who doesn't nag
you daily to take out the garbage Yeah well that
ring's gonna cost you about fifty thousand dollars because well
there aren't many diamonds that big guy either Relatively scarce
and they are desired If you want Cady playing on
your hopes team Well it's gonna cost you about a
quarter unit a season That twenty five million dollars because
you know units hundred million bucks Why Well they're scarce
They're scarce their desired They're not like a hamburger and
their desired by many rich people who bid up pricing
and well that's just how the game is played So
these air today's prices for the intersections of supply and
demand Tomorrow prices will move his attributed values or continually
influx We value something's more today than we will in
the future and all that stuff and I did might
be scarce But that doesn't make it worth a lot
of money Not if demand is low like well the
Shmoop Family Singers song album is scarce and oh so
not desired Yeah there's only one Steven Seagal this fat
bald guy here he used Teo you know be somebody
big action star in the day But he's not getting
Denzel or even Brad Pitiful money These days the values
attributed to scarcity can go the other way to something
that used to be very common can become scarce you
know like a bald eagle about that And if demand
remained flat or steady well these now scarce but demanded
things can become prized So watch out Brad you might
be one of a kind of scarcity doesn't always mean
high value your homies Just one hamburger addiction away from
heading down the Steven Seagal path to oblivion But on
the other side of the coin will maybe put a
burger into your deep freezer just in case Who knows
If it'll be scarce one day if all the cows
were wiped out in a plague you know that mad
cow disease thing is the thing Well Burger's just might 00:05:19.384 --> [endTime] become a scarce resource again