The Concept of Scarcity

Resources are the items needed to do something. For example, oil is a valuable natural resource. Other resources can include workers, knowledge, or technology.

Scarcity is the idea that there are not enough resources to meet the wants of an individual. If you wanted to buy a shirt, pair of pants and a pair of shoes, there is not enough money to buy it all.

Many 16 year olds want or need a car. The costs of owning and operating a car are greater than the average 16 year old can afford. Yet, sixteen year olds still want cars. This situation reflects the basic economic problem, scarcity.

Wants are items that make life more comfortable. For example, wants include luxuries such as automatic dishwashers. We could actually wash dishes by hand, but the dishwasher makes the job easier and quicker.

Governments also face these kinds of decisions. Governments also have limited resources, including money. For example, if a government chooses to spend a lot of money on military supplies, it may not be able to supply as much food to needy people. Local governments often decide between building more schools and repairing roads. When making these decisions, governments and individuals must balance the availability of resources with their wants.

When making a decision about how to spend the money, opportunity costs will occur. Opportunity cost is defined as what you must give up when making an economic decision. For example, if buy a shirt the opportunity cost is the jeans, shoes and backpack that you could not purchase.

Sciences Related to Economics

By John London, eHow Contributor

Economics provides the foundation for business studies.

Economics is a field of knowledge that studies the production, distribution and consumption of goods and services. It is closely interwoven with mathematics and social sciences, which can be defined as studies of the society. While mathematics primarily provides the tools for economics, such as regression analysis, social sciences give it the data with which to operate. For example, history provides economics with plenty of historic production data to analyze.
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History

History is related to economics in a number of ways. First, it provides economics with the material that economists can then analyze. Secondly, history has itself been influenced to a large extent by economic factors. Indeed, many wars, conflicts and revolutions came about as a result of economic disputes. In addition, numerous inventions that shaped the course of history where introduced to improve the economic condition of the inventor or people in general.

Geography

Geography is another social science that is closely linked to economics. A favorable geographic position is a large determinant of the prosperity of a nation. The primary factors in a country's geographic position that determine its economic potential are proximity to markets and abundance of available resources.

Political Science

Politics and economics come hand in hand. As John Maynard Keynes, a famous economist, once observed, "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." Economic theories influence politics. For example, the ideas of economic liberalization pioneered by Milton Freedman had a large influence on the policies of President Reagan. Political theories also influence economics. For example, Adam Smith used many political ideas of John Locke.

Philisophy

Philosophy and economics are so closely intertwined that it is sometimes impossible to distinguish one from the other. For example, much of Karl Marx's writing can be categorized as both economic and philosophical works. Another example is Milton Freedman. While he is primarily regarded as an economist, a distinct libertarian philosophy plays a central role in all his ideas.

Mathematics

Mathematics provides the tools that economists use. Particularly important are algebra and calculus, as they allow economists to construct elaborate econometric models that study the gross domestic product (GDP), employment, inflation and other macroeconomic variables. Mathematics is also used in microeconomics, for example, to calculate the optimal price of an economic good.

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What Is Scarcity in Economics?

By Allison Reilly, eHow Contributor , last updated December 19, 2011

What Is Scarcity in Economics?

Scarcity occurs when people want more of something than is readily available. In economics, scarcity forces people to make choices, as everyone cannot have everything. Without scarcity, an economy cannot exist.
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Identification

Scarcity is the concept of finite resources in a world of infinite needs and wants. Economics assumes people are greedy and always have needs and wants. However, there is only a certain amount of most goods. Therefore, people are forced to choose among their needs and wants, because Mother Nature does not satisfy our needs and wants infinitely. Scarcity encompasses these choices.

Significance

Economics is the science of purposeful human action--that is, our choices. Without scarcity, economics is impossible. If things were not scarce and people did not have to make choices because everything was freely available, then people would not forced to make any tradeoffs among their needs and wants--and thus, no economy.

Effects

Any positive price is proof of scarcity. Prices are evidence that goods are scarce and that people makes choices about their needs and wants. Scarcity makes rationing a necessity. Scarcity also encourages competitive behavior. All people want to improve their condition, but everything has a finite quantity. People must compete for the scarce goods.

Warning

Scarcity and shortage are not the same thing. A shortage is when the demand for a good exceeds the supply, usually meaning the price is too low and the market is not clearing. Scarcity always exists, but a shortage can be fixed.

Famous Ties

Adam Smith (1723-1790) is considered the father of economic science. Although some of his economic ideas were brilliant (such as laissez-faire, the invisible hand), Smith overlooked the concept of scarcity in his theory. When attempting to explain the concept of prices, he forgot that some things are higher priced because they are rare and not very abundant. He assumed that prices were just a reflection of the value of the good, when really values are subjective. Scarcity is objective.

What Are the Main Branches of Economics?

By Fred Davis, eHow Contributor

The branches of economics provide insight into how societies function.

Economics is the study of how modern economies work. There are two main branches of economics, macro- and microeconomics, but there are other divisions. Within these branches, the production, distribution, and consumption of goods and services are analyzed in order to understand how economies and people within those economies interact and function.
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Microeconomics

Microeconomics focuses on the economic behaviors of individuals in many aspects, including decision making, production distribution, and market results. Microeconomics, as the name suggests, deals with small units or individuals or smaller companies. It deals with concepts such as markets, which can be for products or services; production, which exchanges commodities for consumption in return for money or other services; cost; specialization, which refers to divisions of labor; and supply and demand.

Macroeconomics

Macroeconomics studies economic systems on a larger scale, including national income, consumption, investment, large-scale behavioral patterns in regards to economic growth, employment, inflation, and national and international trading. It is concerned with an overall economy and an economy's Gross National Product, or GNP. Factors such as

stability, means of production, technology all come into play when analyzing economies in accordance with macroeconomics.

Positive Economics

Positive economics is a branch which focuses on objective analysis. This takes the past economic picture into account when envisioning and making decisions for the future. This is opposed to normative economics, which relies on value judgments rather than empirical evidence. With empirical evidence, positive economics can evaluate how economies have reacted to certain variables in the past and then apply these reactions to how future economies will react under similar situations.

Applied Economics

This is the branch of economics which employs economic theory into business practice. This occurs in a range of fields and turns abstract ideas into concrete practices. Applying theory to practice helps show the true status of a company's economy whereas pure theoretical thought does not show the true picture of a current or emerging economic position.

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The Four Factors of Production in Economics

By Mark Kennan, eHow Contributor

A tractor is an example of capital.

One topic of study in economics is how and why different amounts of different goods are produced in an economy. Economists who study why one area produces more lumber while another produces computers, or why one country has more small businesses while another has only state-run corporations, will look at the four factors of production to help

guide their inquiry. The four factors of production in economics are land, labor, capital and entrepreneurship.
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Land

Land refers to the natural resources that are available and used in the production of goods. For example, a heavy mining industry could not exist without the natural deposits of valuable minerals in the ground, while a thriving farming community would have a hard time surviving with poor soil and no rainfall.

Labor

Labor refers to the human inputs of work to produce the goods and services. For example, the training required for employees to successfully operate machines to produce cars would be considered as part of labor. In addition, the mental capacity to perform tasks and invent new products is also part of labor. The only human element not included in labor is entrepreneurship.

Capital

Capital refers to the tools and machines that are required for the production of the product. For example, when making cars, the capital would include the factory and all the machinery in the factory used in making the car. On a farm, the capital would include the tractors, harvesters and other equipment used to grow crops or raise livestock.

Entrepreneurship

Entrepreneurship refers to the economic motivation for an individual to attempt to make a profit from an idea. For example, people may know how to build cars, machines may be available and the land for the factories for sale, but it takes an entrepreneur to put those factors together in an attempt to make a profit. Entrepreneurs put their own resources at stake by personally investing in the company. For example, a business owner is not paid an hourly wage like the people who work for her. Instead, her income depends on the success or failure of the business venture.

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How to Apply Economics to Everyday Life

By Amanda Rumble, eHow Contributor

Economics is a social science that is concerned chiefly with the description and analysis of the production, distribution and consumption of goods and services, per the Merriam-

Webster dictionary. However, economics is not only used in politics and the government. Economics affects various parts of our everyday lives, even if we don't realize it, from the price of groceries to the value of an expensive piece of jewelry. Following are some of the ways we employ economic principles in our daily lives.
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Instructions
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Every time you invest goods or resources--including money--in expectation of a return that is greater than your initial investment, you are practicing economics. An example of this is going to college. It costs large amounts of money, and at least two years to get a degree, but the investment allows you to seize better job opportunities and increase your income.
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You can--and often do--use economics to make important life decisions. Deciding to have children is one of the circumstances where couples must determine how much it will cost-in other words, the economic impact--to raise children and how many they want to have. If the financial "cons" of starting a family outweighs the pros of having children, you might decide to postpone the decision. This is called a cost-benefit analysis.

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Factoring economic principles into your household budgeting can help you strengthen your financial picture. Economic experts classify goods into three categories: inferior goods, normal goods or luxury goods. Generic products, such as food or cleaning supplies, are inferior goods that you purchase due to a lack of income. Normal goods in the same categories are the brand name products you may purchase as your financial resources increase. The luxury goods (or services), which include spa treatments and hiring a nanny or housekeeper, come into play when one has excess goods and income.
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Purchasing goods based on their elasticity is a common way we employ economics. A good that you will continue to purchase, regardless of a price change, like gas for your car or home heating is classified as inelastic. You need it to get to work and to stay alive in winter months. On the other hand, goods that you decide not to buy when the price increases, such as a dozen donuts at the local donut shop, are elastic.

BICOL UNIVERSITY
BU Quality Policy Bicol University commits to continually strive for excellence in instruction, research and extension by meeting the highest level of clientele satisfaction and adhering quality standards. Vision A University of Excellence characterized by scholarship engagement for the community towards sustainable development. Mission The aforecited vision is rooted in Bicol University's mandate as provide in RA 5521 which is "to give professional and technical training and provide advance and specialized instruction in literature, philosophy, the sciences and arts, besides providing for the promotion of technological researches, (Sec.30). Hence, graduates of the Bicol University shall be distinguished by their industry, nationalism and integrity. Along this line, extension service to the community and resources generation through its various productive endeavors shall complement the University's mandated instruction-research-function. Goals and Objectives 1. Provide professional and technical training as well as specialized instruction in communication, language, literature, culture and the arts. 2. Produce dynamic and highly competetive graduates distinguished by their industry, nationalism and integrity in the fields of communication, communication technology, language and literature, culture and the performing arts. 3. Develop competent, responsive, critical and humane professional, capable of delivering the highest quality of service along their specialized fields, thereby promoting truth and justice towards the attaintment of regional, national and global goals. 4. Undertake research and extension services to the community in communication, language, literature and the arts that respond to regional, national and global concerns. 5. Provide professional and technical services to various stakeholder, in support of the mandated of the university on instruction, research, extension and production.