Application of Scarcity

When a given commodity is said to be scarce, it’s not given for free. In order to obtain something of value, usually money or another scarce commodity is traded off.

Scarcity gives rise to price although we have to keep in mind that not all of these limited resources can be classified as scarce. Water in the oceans may be limited, but since they aren’t economically in demand, they are not scarce. Air also limited, but not scarce. In effect, only resources considered to be scarce are attached with a value.

In developing countries, almost all goods and services come with a hefty price tag since most them are very scarce and limited. Constrained resources such as manpower, land, high-tech equipment, and industrial raw materials are some common examples. Since they are very rare in a given country, they don’t come cheaply. It’s quite unfortunate that these high-priced scarce resources often hinder economic progress in most third world nations. That’s why it is very important to economize and treat them with great care.

Scarce resources differ in most parts of the world. For most industrialized countries, their main scarce resource is manpower. There may be a high demand for labor, but their workforce cannot fully compensate for every opportunity. As a result, human labor in developed countries is more expensive than its third world counterparts. In order to economize such deficit, capital goods like machinery and equipment are utilized. They produce laborsaving machines like computers, tractors, textile equipment, and road-building machinery to compensate for their lack of manpower. Developing countries follow the same flow of logic, but their needs are quite the opposite. In most poor nations, there is an oversupply of unskilled labor, but a big need for mechanized systems. Labor-intensive methods are adopted to put the big supply of labor into use.

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