Scarcity & Economics.

 

Scarcity & Economics

Now for this topic, if you open any economics book, you easily find this line "resources are limited and at the same time human wants are unlimited " well, you familiar with 'resources', 'limited', 'human wants' but connected those words with economics is a little difficult for a beginner, let's take an example and break it down, you want to buy a new pc in next month and now its price 50k and after one month when you go to the market or say order online you surprised by looking its price its 55k now！You should sound like Oh god！what happened in this 30 days that extra 5k added with my dream pc?

There are two possible answers one is related to limited resources and another with unlimited wants, also we can relate them with two essential terms of economics, 'Supply'&'Demand'. 

suppose your country produces 95k of pc and 100k pc demanded by consumers, so 5k people are not getting their dream pc this month...Ops. This problem arises from the demand-side and we can say that everyone's wants not fulfilled.

Now, look at the different side of the coin with another example suppose your country demanded 100k pc and due to some reason the supply of pc decrease and now its 95k  there is a supply shortage but the reason for this shortage coming from the supply-side or you can now relate it with limited resources.

Note that the first shortage coming from the demand side for a given supply quantity and the second one coming from the supply side with a fixed demand.

Okay. with those examples, one interesting question must arise in our mind that I'm getting my pc or not ? or I'm among these 5k people who are not getting pc? Well the answer is quite simple you are getting pc or not its depends on your willingness to pay for your pc if you add an extra 5k to your budget than enjoy your new pc if not wait and save some money for the next sale. 

You now understood that the fluctuation of price and its cause, Yes, price is the determining interaction between supply and demand if it's a free market, a market without government intervention. And the price is the only signal that decided you are able or not to buy your product.

In the future, we must set a tent on the moon or on mars, for now, the earth is our only source of resources which makes our resources constant. on the other side increasing population tending ours wants towards infinity.

There are several other factors or variable which also have an impact on price. For scarce resources, we have to allocate resources in the most efficient way for members of our society and maximize the welfare of our society which is one of the most important goals for every economist.