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Course: Microeconomics > Unit 1
Lesson 1: Introduction to economicsScarcity and rivalry
This video discusses two closely related ideas in economics: scarcity and rivalry.
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I don't see a difference between rival good and a scarce resource. The definition of a rival good (a good where one person using it limits the ability of others to use it) must always be true for a scarce resource (since it is limited. and thus use of it will limit others' ability to use it). Why is there a distinction between these two words that seem to mean the same thing? Are there any resources that can be scarce and not rivalrous at the same time (or vice versa)?(27 votes)- I'm new to this topic, so I'm not sure if what I think is right, but I'll try to explain what I think. So let's think about road. Road, as mentioned in the video, can be both a rival good and a non-rival good. But can road be both scarce and not scarce? I would say road is definitely a scarce resource because you cannot create roads infinitely. So basically, all rival goods are scarce, but not all scarce resources are rival goods. This is because making scarce good requires labor, other finite resources, etc., but it does not mean that people will want to use it simultaneously for all the time. Of course, some goods like houses are scarce while being a rival good, but I think not all of the scarce resources are necessarily rival goods.(33 votes)
Are there scarce but non rival goods or rival but non scarce goods? Aren't the two terms basically the same?(1 vote)
The two terms are similar, but not exactly the same.
Certain public services may fit the description of scarce and non - rival. Take street lights for example. The lights themselves are scarce, since their production requires labor and other finite resources. You can't produce unlimited street lights. However, they're not necessarily rival goods since one person's use of the light emitted does not reduce its usefulness to others. All rival goods are scarce, but not all scarce goods are rival.(22 votes)
What are some examples of perfectly non-rival goods?(4 votes)
Public goods are considered non-rival goods.
If one person's consumption does not affect another person's consumption of the good, than that good is considered non-rival. A good example of this is AM and FM radio. One person getting a radio signal from their phone or radio does not impede someone else's radio from working either. More examples include national defense, public safety, and street lights.(10 votes)
Why aren't there more examples of rival goods?(3 votes)- He decided to keep the video short just to briefly explain the difference. I'm assuming that scarcity is supposed to describe a lack of resources to produce sufficient goods and services in a broader sense, and rival goods probably focuses on things people compete for to obtain. (Example: A seat in a college course during peak registration times, rental apartments and homes, maybe tickets to a concert that is highly expected to sell out...(3 votes)
Is what is scarce necessarily rival—and vice-versa? Are scarcity and rivalry, in other words, identical—or do they just occur together? Can a good be scarce without being rival, or rival without being scarce? Clearly, it's possible for a good to be neither scarce nor rival, such as your own attention, or the oxygen we have on Earth to breathe. And, as Sal mentions in the video, scarce and rival goods exist too. But how about non-rival scarce goods, or non-scarce rival goods?(2 votes)- Take roads. Road, as mentioned in the video, can be both a rival good and a non-rival good. But road can’t be scarce and not at the same time. I would say road is a scarce resource because you cannot create infinite roads. So basically, all rival goods are scarce, but not all scarce resources are rival goods. This is because making scarce good requires labor, other finite resources, etc, but it doesn’t mean that people will want to use it simultaneously. Of course, some goods like houses are scarce while being a rival good, but not all of the scarce resources are necessarily rival goods.(4 votes)
- what is the difference between rival and scarcity I mean the main difference(0 votes)
The easiest way to distinguish between the two is that scarcity is a naturally occurring limitation on the resource that cannot be replenished. A rivalry is a market condition of a particular good at a particular price. Over time, the good will be replenished and the shortage condition resolved.(4 votes)
If I'm not wrong can we put the Sale of Software , or the way we have access to exclusive features on certain applications as a non-rival good as it doesn't take up any physical space or extra expenditure from the producer in giving up that service?(1 vote)- Yes, you're on the right track with this understanding. Software and digital services often represent non-rival goods because one person's use of the software does not diminish the ability of others to use it simultaneously. When a company sells software or provides access to exclusive features on an application, it does not incur additional costs for each extra user (beyond perhaps some marginal costs related to infrastructure or support services), and the digital nature of these goods means they don't physically deplete through use. However, it's worth noting that while software can be considered a non-rival good, access can be artificially limited through licensing or subscription models, which introduces a form of rivalry not based on the natural characteristics of the good but on business models and intellectual property rights.(1 vote)
I'm looking for financial terms and investing things for a school project. I don't have too much time, and I'm looking for a better course.(1 vote)- Is there any math involved here? Or any accounting related?(1 vote)
There is simple math involved (essentially skills that you'd learn in Algebra I), but nothing that is too advanced in an introductory economics course.(1 vote)
- Aren't all scarce resources rival resources?(1 vote)
- Maybe, since if you are the only person who s using the resource, then it isn't a rival resource. So maybe it's based on context.(1 vote)
Video transcript
- [Instructor] What we're going to do in this video is talk
about two related ideas that are really the
foundations of economics, the idea of scarcity
and the idea of rivalry. Now, in other videos, we do a deep dive into what scarcity is. But just as a review,
in everyday language, you could think of something is scarce, a good or a service is scarce if there's not enough for everyone. Another way to think about it is a scarce resource is one that is limited. It is a limited resource, and there's not enough to go around because there are potentially
unlimited wants from people, so potentially, potentially unlimited, unlimited wants. And we could think of a
lot of scarce resources. Oil would be a scarce resource. There's a limited supply of oil. And potentially, if oil were free, there's an unlimited amount of people who would want to use that oil. And so a lot of economics is, well, when you have a scarce resource, like oil or land or housing, how do you allocate those
resources amongst people, people who are demanding those resources? Now, rivalry is a related idea. When we think about the
everyday word rival or rivalry, you imagine multiple parties
competing for something, and that's essentially
getting pretty close to the economics definition of it. Something is a rival
good or a rival resource, I'll just call it a rival good right now, if, when one person uses it, it limits the ability for
other people to use it. So one, one person consuming it or using it, consuming it limits ability, ability for others, for others to use. And there's a lot of
examples of rival goods and things that are both
scarce and rival goods. For example, if I were to
put a nice, delicious cake that could only serve
four people in our office here at Khan Academy, where
we have 80 or 90 folks work, well, you can imagine, that
cake's going to be a rival good. It's also a scarce good
because many people, many more people are
gonna want that cake than the amount of cake we have. But when you look at what the
definition of a rival good is, every time I, if I eat the whole cake, that's going to limit other
people's ability to use it. And economists will sometimes
create a spectrum of how rivalrous a good is. So, for example, let me draw
a spectrum right over here. So on this line, so on the left-hand side, I
will call this highly rivalrous, which is, they'll actually use that word, but I'll just call this rival goods. And then at the other
extreme here, I'll say non, non-rival, non-rival good. And at the left end, it's pretty easy to come up
with a bunch of rival goods. If you're living in a place
where housing is tight, where all of the housing is taken up, housing is often a rival good. I live in the San Francisco Bay Area. And when a house goes on rent,
you'll have multiple people who are competing for that
house, or if it's going for sale. And so when one person gets
it and gets to live there, well, that's going to make it hard for other people to use it. You could imagine, you know, land in a lot of urban areas is a rival good. You could imagine something
like, you know, a cake, especially if there's not
a lot of cake to go around at a birthday party. Now, what would be the other extreme? What would be a non-rival good? Well, there are very few
perfectly non-rival goods, but there are things that are close to it. Because at least relative
to where people's, where people are trying to use it today, it seems like there's almost
an unlimited supply of it. One example might be
something that's close. I'm not gonna put it
all the way at the end. I'm gonna put air, air to breathe on Earth. Now, right now it's a non-rival good. When I take a deep breath,
it doesn't make it hard for you to take another
simultaneous deep breath. And actually, let me put
a little qualifier here, simultaneously, simultaneously. That's actually a key
qualifier for a rival good. So, for example, a hammer
is also a rival good. Because if I'm using it right now, it becomes very hard for you
to use it simultaneously. Now, as I mentioned, air to breathe, if I take a deep breath right now, it doesn't make it any harder
for you to take a deep breath. But if you were to take a
extreme circumstance that, let's say that if we were in a closed room with a limited supply of
oxygen, well, then the air might become something
closer to a rival good. So let me put it this way,
air to breathe outside, while here I'll put air in airtight, or let me put oxygen
in an airtight container or airtight room, oxygen in airtight room or maybe a room that
is running out of oxygen. Well, then every time I take
a breath, it's gonna make it harder for you to take
a breath and vice versa. There's other things like,
well, roads are rival goods, especially if we're
talking about rush hour. So let me put this right over here. So let's call this the
roads during rush hour, roads during rush hour. The more people that are on the roads, that it's gonna make it harder for other people to use it simultaneously. It will get all this traffic. People won't even be able
to get on the highway 'cause there's so much gridlock. But then you could imagine roads in the middle of the
night are non-rival goods. If I decide to take a drive at three in the morning on most highways, it doesn't make it any
harder for another person to take a drive on that
highway simultaneously. So let me put it over here, roads, roads at 3:00 a.m. in most places is closer
to being a non-rival good. So I will leave you there. These are ideas that we're going to keep revisiting in economics. But it's good to have a
sense of what they mean, and then it'll inform how we think about allocating these scarce
goods amongst folks and thinking about how we allocate these rival goods amongst various parties.