Scarce Resources and Unlimited Wants

Introduction : 

Economics is based on the concept of scarce resources and unlimited wants, which means that people must make decisions based on the availability of assets used to produce goods and services that fulfill their needs and wants. For example, a technology manufacturer such as Samsung, which produces both phones and tablets, must decide how to allocate its resources between the two products based on the demand for each. Therefore, one of economics’ stipulating features is scarcity. 

Scarce Resources and their Allocation : 

To put it simply, scarcity refers to a situation where there is a limited supply of a resource in comparison to the demand for it. We can see that in time, as time is finite and impossible to replace. Thus, people make a lot of decisions solely based on their scarcity of it. 

So markets decide what to produce, for whom to produce, and how to produce. So that the resources are allocated to some extent to maximize economic growth and stability. 

Unlimited Wants : 

Essentially, unlimited wants mean that we as human beings are never satisfied. There will always be something that we crave and want to have. This creates a problem when resources are limited, which leads to a scarcity problem. An example of this is, when we finally buy a car, after a while, when we get used to it, it no longer holds its initial value, and we may want to upgrade to a more luxurious car. 

Unlimited wants result in us having to prioritize the available resources. We make compromises and trade-offs, to achieve the best possible outcome. 

Implications for Pricing and Production : 

Businesses, clients, buyers, and generally the economy is heavily implicated by the pricing and production decisions. Businesses need to set a specified price, that covers their production cost and still remains a reasonable price to compete with other businesses. Because if a price is too high, its demand may decrease, which would result in fewer sales. If a price is too low, it might not cover the needed expenses to produce revenue. 

There always needs to be a good balance between pricing and production to maintain a healthy and competitive economic environment. Not paying any mind to this important factor could result in inflation(if the price is too high) and deflation(if the price is too low). 

Critiques : 

The main problem with the concept of scarce resources and unlimited wants is that there are never enough resources to satisfy and fulfill people’s wants. So that creates a cycle of constant insatiableness. For example, there was a land dispute in my old town Hassi Bahbah, that was about land due to the increasing population of the town. We had to give up a lot of the farming land, and forests, which directly lead to a scarcity of places to grow food and wood. 

One of the alternative economic models to scarcity is the circular economy(CE). Which basically maintains a full cycle during production that involves reusing and cycling materials to a great extent and minimizing waste. Instead of using new materials continuously and discarding them, we’d be taking advantage of already existing materials and regenerating an abundance of resources that help use them sustainably. 

A great example of this is Dell, an American technology company that uses closed-loop manufacturing. Dell takes care of the entire process of recycling its products and reusing the materials of old computers to manufacture brand-new ones.  

Another example of the circular economy is IKEA, it’s working on designing products to be reused, refurbished, and recycled to meet the challenges of unsustainable consumption, climate change, and inequality. 

· Vocal Media.(2023). https://tinyurl.com/4y7uzfe9

Conclusion : 

In conclusion, scarce resources and unlimited wants is a complex subject that has a lot of arguments both for and against them. There is no denying it creates a competitive environment. As Adam Smith suggests that an economy thrives the most by individuals who are motivated by self-interest. However, as time is passing by we are starting to see major problems concerning the environment and the obvious gap between economic classes. That’s why circular economy is a promising concept, and big companies such as Dell, H&M with its program called Conscious Collection, and many other companies are starting to incorporate this economic model. 

By proposing new models, we get closer and closer to building a resilient and impartial future for us humans to prosper. 

We need to keep exploring new concepts to further our capabilities and stand the test of time.  

                                           

  

                                                                                          

 

 

 

Bibliography: 

·       IKEA.(2023).Becoming a circular business https://tinyurl.com/4zyruj7p 

·       Indeed.(2023).What is scarcity in economics https://tinyurl.com/3abba5a6 

·       Market Business News.(2023).What are unlimited wants? https://tinyurl.com/58576jv6 

·       Investopedia.(2023).Self Interest: What it Means in Economics https://tinyurl.com/7kbkmxv7