what is scarcity 
scarcity is an economic concept where individuals must allocate limited resources to satisfy their needs scarcity occurs when demand for a good or service is greater than availability scarcity affects the monetary value individuals place on goods and services investopedia mira norianproduction and demandif goods and services are abundant and unlimited there is no need to make decisions about allocating resources however scarcity limits the choices available to consumers in an economy scarcity makes goods more valuable and sellers can set higher prices scarcity also describes the relative availability of factors or production or economic inputs 1suppose producing a widget requires two labor inputs workers and managers with one manager required per 20 workers the available labor pool consists of 20 000 workers and 5 000 managers there are more available workers than managers yet workers are a relatively scarce resource since they re needed for a ratio of 20 per manager for production but outnumber managers by a ratio of only 4 to 1 in the labor pool societies face limitations when trying to increase supply production capacity land available for use time and labor are all considerations another way to deal with scarcity is by reducing demand through quotas rationing or price caps scarcity forces consumers to make choices that come with associated opportunity costs opportunity cost is the cost of what is given up compared to the value of the alternative natural resource scarcityabundant common resources over consumed at zero cost at first often prove limited climate isn t a tangible asset and its value is hard to calculate but the costs of climate change affect companies and societies air is free but clean air has a cost in terms of the economic activity discouraged to prevent pollution for health and quality of life some natural resources that may appear free because they are easily and widely accessible eventually prove scarce as they are depleted from overuse in a tragedy of the commons economists increasingly view a climate compatible with human welfare as scarce goods because of the cost of protecting them and place a price on them for a cost benefit analysis 23governments may require manufacturers and utilities to invest in pollution control equipment or to adopt cleaner power sources governments and the regulated industries eventually pass costs to taxpayers and consumers scarcity and the marketscarcity may denote a change in a market equilibrium raising the price based on the law of supply and demand in those instances scarcity denotes a decrease over time in the supply of the product or commodity relative to demand 4 the growing scarcity reflected in the higher price required to attain a market equilibrium could be attributable to one or more of the following 