Basic Economics: Scarcity and Choices

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Part 2: Scarcity and Choices

When things are scarce, we have to make choices. If the market doesn't have strawberries, you have to decide if you really want strawberries. If you do, then you will have to travel to different markets to try to find some strawberries. If you don't find any strawberries anywhere, then you will have to go without. Scarcity has forced you to go without strawberries.

In the same way, the latest Harry Potter book might be difficult to find because you weren't one of the early people at the bookstore the day the book came out. If your local bookstore ordered only 5,000 copies and 4,998 people bought the book before you got there, then you'd better hope you're one of the next 2 people through the door. The same is probably true at other bookstores in your area. We can say that the latest Harry Potter book is scarce because its supply is low.

Another choice you might have to make when something is scarce is how much you are willing to pay for it. If strawberries are normally a low price, then they might have a higher price when they are scarce. If that is the case, then you will have to decide whether you want to pay the higher price. You'll have to decide how badly you want those strawberries. If you have only a certain amount of money, then you'll have to buy the strawberries using some of the money you had planned to spend on other foods. Scarcity has forced you to make a choice between foods.

For many people, making difficult choices is a way of life. If you don't have enough money to buy all the foods you need (and many, many people don't), then you have to make choices. And the more scarcity you see on the shelves of the market, the more difficult choices you have to make.

The same is true if the scarcity is created only by a seasonal market, like the strawberries or other fruits and vegetables. Some crops grow better at certain times of the year, so they are harvested at those times and sent to market at those times. If you want strawberries and it's not strawberry season, then the supply of strawberries is most likely scarce, if any are available at all.

Lastly, sometimes scarcity is created only because a supplier has sold out of a certain product. A sale on older Harry Potter books might result in a bookstore's selling all of the books on hand. And if other bookstores have similar sales, then it will be very difficult to find one of those older Harry Potter books. This is scarcity caused by too many people trying to buy too few things.

Scarcity can be a powerful thing. It can force you to make difficult choices. It can force you to go without. It can force you to pay more than you wanted to. It can force you to look elsewhere for the thing you want. The next time you discover that something you want isn't available, remember the idea of scarcity. What choice will you make?

First page > Scarcity > Page 1, 2

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