Scenario_Concept

Scarce Resources & Economics Hasha Hines Bernal ECO/561PR Economics-Puerto Rico November 22,, 2011 Prof. Adelaida Torres Dilan, M.A. SCARCE RESOURCES & ECONOMICS Supply and demand! Two words that everyone in the business and supply world are familiar with. It is one the basis of today’s commercial and market economy as well as one of the key principles within economics. As long as there is a need for a certain type of product or service or resource, there will always be a company or individual that is willing to fulfill that need. But what if there is not enough of a certain product or service to satisfy the demand' The idea of scarcity is not new in business, but it is easy to understand when it is explained in terms that are simple and clear. Even children at a young age are aware of the smallest concept of scarcity. It must be understood that scarcity does not affect anyone personally. We all at one time or another are limited by such things such as energy, time and money just to name a few, however, it is the choices that we make that affect the concept of scarcity. In some cases, we are not involved at all as to the input of how much of a resource we will receive, but it is the choices that we make as to how to use the resources we are given. If we know that resources are scarce, we should in turn realize also that production will be scarce as well. Many economists believe that the commercial and material wants of society will continue to remain unlimited, however, this is a contradiction to resources which in many cases tend to be limited. There will never be enough of anything to actually satisfy everybody or the demand. This in turn creates an economizing problem. This is the ‘”how” and “who” when it comes down to the distribution of resources. Economic wants are defined as the continuing wants and desires of the general population which in the end focus on their own satisfactions. Theories and models are then created by economists exploring the contrast between the two. The wants, needs and desires of people and the limited resources available. One of these models is referred to as the production posibilities curve (or model). This macoeconomic model tries to demonstrate where an economy should be, however, this mostly depends on the whether or not all resources are fully employed. However, it can also demonstrate how certain goods can be sacrificed in order to retrieve another. Because goods are scarce, we in turn then have to depend on society to make the choice in implementing how these goods are distributed and put to use. Producing consumer goods will continue to satisfy the general population at any given time, but on the other hand, producing capital goods allows companies to produce more cost efficient, higher quality products in the long run. Another model that is basic and fundamental is referred to as the supply and demand model. This model helps us understand the prices and quantities of goods sold on the market. This model is also very much affected by competition. What is wanted (or demanded) is directly correlated to the cost (price) and to what is actually able to be supplied (or produced). It must be understood that there will always be those goods and services that will continue to remain scarce. These goods which are mostly intangible, are things like fame and/or membership into elite organizations. Because of their scarcity, (no matter how artificial), this in turn is what makes their value higher. Most people understand the fact that it is the directions we go in with our own finances that can also drive the economy of the business world. The choices we make even when doing an activity as simple as shopping in the grocery store (ex. should I buy generic or name brand) can be a factor in pushing today’s economy. In reality, no one ever really gets everything they want in life no matter how much money they amass within their lifetime. References Investopedia, 2011, retrieved from: www.investopedia.com, accessed on 20 November 2011