Scarcity and choices

Why do we have to CHOOSE? Why can’t we just have everything we want? The simple answer is SCARCITY. Scarcity is the fact that there is not enough of most things to go around — not enough money, not enough time, not enough rare stuff. Because resources are LIMITED but our wants are UNLIMITED, we are forced to make choices. Every choice comes with a TRADE-OFF: the next-best thing you give up to get what you picked.

Scarcity — when there is not enough

SCARCITY happens when there is NOT ENOUGH of something for everyone who wants it. Diamonds are scarce because there are only so many of them on Earth. Front-row concert tickets are scarce — only a few people can have them. Rare baseball cards are scarce because the company stopped printing them. When something is scarce, it usually costs more, and people have to compete or choose carefully to get it.

• DIAMONDS — only so many are dug up each year.
• FRONT-ROW CONCERT TICKETS — a stadium has only one front row.
• AN ORIGINAL MASTERPIECE PAINTING — there is exactly ONE Mona Lisa.
• A RARE BASEBALL CARD — the print run ended decades ago.
• TIME — you only get 24 hours in a day, no matter what.

Abundance — when there is plenty

ABUNDANCE is the opposite. Something is ABUNDANT when there is PLENTY of it for everyone who wants it. Air is abundant — you breathe as much as you like and no one runs out. Sand at a beach is abundant. Sunlight in summer is abundant. Grass in a meadow is abundant. Abundant things usually cost nothing or very little, because nobody has to fight over them.

• AIR to breathe — free, everywhere, never runs out.
• SAND at the beach — billions of grains, no shortage.
• SUNLIGHT in summer — shines on everyone the same.
• GRASS in a meadow — grows back on its own.
• WATER from a public drinking fountain in your local park.

Limited resources, unlimited wants

Here is the BIG IDEA of economics: resources (money, time, materials) are LIMITED, but human wants are UNLIMITED. There is no end to the list of things people would like to have. Because the supply does not match the wishlist, every person has to choose. Even billionaires run out of TIME, even kings run out of HOURS. Scarcity is everywhere.

Trade-offs — the next-best thing you give up

When scarcity forces you to pick, you make a TRADE-OFF. A trade-off is the next-best thing you GIVE UP to get the option you chose. If you spend Saturday afternoon at SOCCER PRACTICE, the trade-off is the family hike you missed. Pick the math club after lessons? The trade-off might be the art club that meets at the same time. Sleep in late? The trade-off is less time for breakfast. Every choice has one — even tiny ones.

1. You spend free time on SOCCER practice. Trade-off = the ART club you skipped.
2. You buy a fancy snack with your $5. Trade-off = the savings you did not put aside.
3. You watch a movie tonight. Trade-off = the chapter of your book you did not read.
4. You sleep in until 9. Trade-off = the slow, peaceful breakfast you did not have.
5. You join the math club. Trade-off = the chess club that meets at the same hour.