Everyone has an understanding of scarcity, whether they are aware of it or not because everyone has experienced the effects of scarcity. Scarcity explains the basic economic problem that the world
has limited—or scarce—resources to meet seemingly unlimited wants.
This reality forces people to make decisions about how to allocate resources in the most efficient way possible so that as many of their highest priorities as possible are met.
For example, there is only so much wheat grown every year. Some people want bread and some would prefer beer. Only so much of a given good can be made because of the scarcity of wheat.
How do we decide how much flour should be made for bread and beer?
One way to solve this problem is a market system driven by supply and demand, covered in the previous blog post. If something is scarce and a lot of people want it (there is a high demand) the price will tend to rise. If something is plentiful (not scarce) and easily available, even if a lot of people may want it (there is a high demand) the price will tend to fall or remain low.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. should you need any advice with regards to or our suite of products, services and solutions.
Source: Investopedia, edited by Anton Schutte: General Manager and Certified Financial Planner CFP®: PWG Group