Scarcity and choice

Scarcity and choice

The concept of scarcity and choice was introduced by British economist Lionel Robbins in 1932. Both scarcity and choice are major issues in economics.

Scarcity here means failure to meet wants through available resources or there is a shortage of resources. Human wants are unlimited but productive resources are limited. The major scarce resources are labor resources, natural resources, and capital resources. Because of the scarcity of resources, wants will not be fulfilled, leading to economic problems.

Economics is a social science. As a social science, it studies people in society and how they interact with each other. It also studies how individuals and societies chose to utilize scarce resources to satisfy unlimited human wants. All the scarce resources are used to produce goods and services that we want or need. So, the goods and services produced are also limited or scarce. On the other hand, human wants or needs are unlimited. Therefore, there is a conflict between scarce resources available and unlimited human wants. People cannot have everything they desire. So, there must be some system of distributing scarce resources.

When all wants can't be met because of scarce resources, another problem arises which should be first met, which is called the problem of choice. Maximum goods should be produced with the efficient use of limited resources. so, problems like; what to produce? how much to produce? how to produce? for whom to produce? etc are basic economic problems. So economic problems mean those of scarcity and choice.

Scarcity

In the ordinary sense, scarcity refers to the unavailability (not easily found) in the market of a certain commodity. But in an economic sense, a commodity is scarce, not because it is rare or unavailable in the market but because the means to have it are limited. We have limited resources at our disposal. So, there is a problem of scarcity.

Human wants are unlimited, but the means to satisfy them are limited. Scarcity is taken as relative sense rather than absolute sense. The resources are scarce, it doesn't mean that they are not available, but they are limited in comparison to human wants. Scarcity explains this relationship between limited resources and unlimited wants. There is poverty and human misery because of the scarcity of resources. A poor man is poor because the resources accessible to him are scarce. A country is poor because there is a scarcity of resources.

Scarcity, in a deeper sense, tells the story of human misery and unhappiness around the earth. Scarcity tells us about the importance of a commodity as well. It tells us how valuable a commodity is? For an individual consumer, it means a higher level of satisfaction and for producers, it means a higher level of profits. The problem of scarcity is present not only in developing countries but also in highly developed nations. So long as human wants are more than the supply of resources, the scarcity problem would not be solved by human society.

Choice

The resources available to satisfy people's wants are limited in supply. As most people cannot have all the goods and services they want, they have to make choice. Since all desirable things are composed to satisfy our wants, we have to choose to make careful use of a scarce resource that is available at our disposal. It means we have to economize the resources. Since resources are scarce, we must decide which want will be satisfied and which will not at a particular period of time. Maximum Satisfaction can be obtained by the utilization of available resources in an optimum manner. We have to satisfy our wants with priorities. The want which is most urgent should be fulfilled first.

The choice is the act of selecting a few goods or quantities among the bundles of goods. In other words, it is the process of selecting few wants from the bundles of wants. So, choice means the allocation of income to the purchase of different goods and services in a manner such that he maximizes his satisfaction.