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Video transcript

the entire field of economics is based on the idea of scarcity and arguably we wouldn't even need a field of economics if there wasn't the notion of scarcity in the world so what does scarcity mean well think about it what does it mean in everyday life it means that there's not enough of something to go around we're talking about scarce good scarce services scarce resources we're talking about things where if there's no cost associated with them people would use far more of that than there actually is around and in this video we're going to think about different types of goods and services or just resources and think about whether they are scarce or not so a related idea to scarce resources is its opposite which is the notion of a free resource so this is something that you could argue is infinitely abundant or at least in a certain context is so abundant but it feels like people can have as much of it as they want the more that one person has of it it doesn't take away from someone else and the reason why scarcity is essential to economics it's because economics is the study of how do you allocate these scarce resources if there's more demand for it than the amount of thing that there is well who gets it how much of it do they get and what do they have to give up in exchange to get those scarce resources but for the sake of this video let's just first make sure we understand and have a good idea of what resources are scarce and which ones aren't and why so this is a picture of caviar which is essentially fish eggs and it's not easy to get the fish eggs are deep in the water someone has to get to them and then they have to package it in some way and they have to get it to your plate and so do you think that caviar is a scarce resource or a free resource well if it was a free resource that means that we're just swimming in caviar that it's so abundant that I could just have as much caviar as I want and there's still as much as you want and that everyone gets as much caviar as they'd like well that's clearly not the case caviar is a scarce resource in fact it is a quite scarce resource and because of that if you want it you have to give up a good bit to get it this is a picture of some people working in a factory and the resource that jumps out here is that of Labor and labor is interesting but because it's not as tangible as something like caviar but it is a resource and one could even argue the the caviar on your plate some of its scarcity comes from the labor involved of getting it to your plate but here the user clearly it looks like these are gentlemen who are putting together some type of fabric and so would you consider labor would you consider that a scarce resource or a free resource what would be a free resource if people were willing to just do as much work for other people actually willing to do an infinite amount of work for other people which isn't even humanly possible and even if it was humanly possible people aren't willing to do that they want something in return and so once again it is a scarce resource there's many resources that are pictured right here you have this beautiful town next to this alpine lake and so some clear scarce resources are here many people would love to have a view like you would get from this house or hotel right over here but not everyone and many people would love to live there because of the view but not everyone can live there so that is a scarce resource the water here is an interesting one I could imagine in earlier times if before there was a town here if there was just a primitive village living next to this fresh water they would probably view it as a free resource if people if someone was thirsty they would just go up to the lake and they would just drink from the lake they would not have to give up anything to drink from that but now the town it might be a little bit more of a scarce resource they might want to preserve it for various reasons in order to get the water to your sink in your house there might be some services or goods or labour involved someone has to set up the pipes maybe it has to be cleaned in some way well then it might become a little bit more of a scarce resource air for most of human history has been considered a free resource and even today I'd argue that something like oxygen at least on our planet is considered a free source when I take a deep breath it does not affect your ability to take a deep breath it does not take oxygen away from you now is there an infinite amount of oxygen in our atmosphere no but for our purposes it feels like there's an infinite amount now if the photosynthetic plants were to disappear and all of a sudden the oxygen started to get diminished or if we were in a space station where there isn't a seemingly infinite amount of oxygen well then you could imagine a world where it could become a scarce resource you can imagine a colony on the moon or on Mars or in the space station where it had some type of economic system to decide who gets how much oxygen so I will leave you there as already mentioned scarcity is the central idea in all of economics it's the reason why we even need a field called economics and as you go forward in your study of both micro and macro economics we'll be looking at ways to allocate these scarce resources we'll try to study what people have to give up in order to have access to these resources and we will have models that will help us understand what are the implications for these different methods of allocating resources
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