Unit 1, Lesson 1: Scarcity

This lesson on scarcity will be on the Basic Economic Concepts portion of the AP examination(s).

The idea of scarcity is simple: the Earth has a finite number of resources, but humans have an infinite number of wants. To make it even simpler, we want it all but can't have it all.

The reason we learn this concept is because it is fundamental to the science of economics.

Economics is essentially the science of decision-making given scarcity. Because we have a finite number of resources, we have to make key decisions about what to do with these resources. As we explore opportunity cost in the next lesson, we will delve deeper into that process and thus, further into economics as a whole.

However, let's focus on scarcity for now.

For something to be considered scarce, it has to be limited and desirable. Let's zoom in on these traits.

Limited - For something to be limited means that there must be a finite amount of it. For example, if a clothing store sells 10 t-shirts, then these t-shirts can be considered limited because the store will eventually run out of t-shirts. In contrast, there is an indefinite amount of oxygen (technically not infinite, but somewhat indefinite for now), so it cannot be considered scarce since it is somewhat unlimited.

Desirable - For something to be desirable means that humans must want it. For example, we generally want food and water, since they are necessary for survival. Thus, food and water can be considered desirable. In contrast, diseases are something which may be limited, but are not desirable and thus are not scarce.

Once again, scarce resources are limited in quantity and desirable.

Key Terms

Scarcity - The idea that humans have an unlimited number of desires, but a limited number of resources.

Economics - The science of decision-making based on ideas such as scarcity, opportunity cost, and more.

Limited - For something to have a defined quantity.

Desirable - For something to be wanted by humans.

Review Question(s)

1. What are the two traits an object must possess in order to be defined as scarce?

a) Limited and Desirable

b) Unlimited and Necessary

c) Infinite and Unwanted

Resources

To review key terms, go to the Quizlet here: https://quizlet.com/315070654/unit-1-lesson-1-scarcity-flash-cards/?new

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