Causes of Scarcity: Definition, Types of Scarcity and How to Overcome It

Causes of Scarcity: Definition, Types of Scarcity and How to Overcome It – What are the causes of scarcity of a product or service? At this opportunity About the knowledge.co.id will discuss Scarcity and the things that surround it. Let's look at the discussion in the article below to understand it better.

Causes of Scarcity: Definition, Types of Scarcity and How to Overcome It

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Scarcity is the limited means of fulfillment which is inversely proportional to the demand for unlimited needs.

Scarcity is also defined as a condition in which the quantity of goods demanded is greater than the quantity of goods supplied. In short, a state in which human desires are unlimited, while the means of satisfying human desires are limited.

In economics, the notion of scarcity is broken down into two definitions, namely:

• Rare in the sense that it is not enough compared to the many human needs, while the various objects available have a limited amount. As a result, there is a shortage.
• Rare in the sense that humans must make sacrifices to get it. Limitations of means of satisfying needs due to scarcity or limited economic resources.
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In general, there are 5 causes of scarcity, including:

• Differences in Geographic Locations

This is because the natural resources on earth are not evenly distributed. There are places that have fertile soils, there are also places that don't. There are places that have abundant springs, but some are not.

• Population growth

An economist from England named Thomas Robert Malthus said that population growth which is faster than production growth will cause scarcity. The more people there are, the more needs that must be met. So, if the production growth is small, then it will not be able to meet this need.

• Production capability

Several factors of production such as natural resources, labor, capital, and entrepreneurship that we have will not have the same ability, so not all needs will be fulfilled.

• Technological development

Technological developments that are more rapid than in the country will certainly affect people's needs This is because low technology can only meet fewer needs than high technology tall.

• Natural disasters

The occurrence of natural disasters will also affect the amount of available resources. So that it can interfere with the fulfillment of human needs.

• War and disease

War causes damage and will seize everything in a country. Likewise with diseases that will cause human resources to experience interference in carrying out their activities. So these two things will cause scarcity.

• government policy

The policies issued by the government are the design of a solution to deal with all the obstacles that arise hit the country. However, if the government missteps, it will cause big problems that can cause scarcity.

• Limited natural resources

Natural resources are divided into two types. Namely renewable natural resources such as water, land and others and non-renewable natural resources such as coal, gold and others.

If natural resources are continuously explored and not managed properly, a crisis is very likely to occur. So that the means of satisfying needs will be reduced and cannot meet unlimited human needs. Or in short there can be scarcity.

• Human resources (experts) are lacking

These experts will greatly determine the viability of the economy in a country. With quality human resources, scarcity will be avoided, but vice versa.

Indonesia does have a lot of human resources, but the number of experts is very small. So that will cause scarcity. The following are some of the reasons for the lack of expertise: low level of education of an individual, no motivation or rewards.

• Human greed

Basically humans have original nature that is never satisfied or enough. Now there are lots of people who are willing to buy anything without thinking long, without making a priority scale. So that extravagant nature will undermine him.

Mahatma Gandhi, stated that "The available natural resources are only sufficient for human needs, but not sufficient for greed." every human being.” Continuously following the lust to buy something, over time natural resources, raw materials will decrease and finally finished. This is what causes scarcity.

• Limited funds

Without funds, economic development will not be able to run and the production process will be hampered. Because, it cannot be denied that funds are an important aspect that must exist in economic activity, especially in an effort to reduce scarcity.

• Imbalance of the economic structure

All sectors in a country must be equal and equal. If not, there will be confusion and can trigger scarcity. Where many countries choose to focus on only a few sectors, so that other sectors do not get attention. If there will be a scarcity on some needs.

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Types of Economic Scarcity Types

The following are some types of economic scarcity:

• Scarcity of Natural Resources

Natural resources or SDA are everything that exists in nature consisting of abiotic resources and biotic resources provided by the creator. However, if the utilization of natural resources is explored continuously, exploitation will occur which will result in the available natural resources being used up. Then automatically it will result in scarcity.

Scarcity of Qualified Human Resources

Human resources are the abilities of an individual that can provide benefits if done optimally. And human resources or HR is considered a scarce resource.

• Scarcity of Capital Resources

Capital resources are resources originating from individuals with the aim of facilitating the implementation of the production process. This scarcity is based on the will and ability possessed by each individual.

Because, basically every individual has the ability to make these capital resources. One way is a strong will to work hard and try not to give up.

• Scarcity of Entrepreneurship Resources or Entrepreneurship

Entrepreneurial resources have a rare nature. Because not everyone can become a businessman or trader. To become an entrepreneur, a person must be able to fulfill the requirements, namely having capital and expertise

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Impact of Scarcity

The following are eight impacts that will occur due to scarcity, including the following:

• Increase in Selling Price

If there is a scarcity in an item, it will automatically raise the price of the item.

For example: oil or fuel that has experienced an increase in price because of the large number of requests that will drain the fuel. The impact of the increase in selling prices will also provide incentives for companies to do a number of things, such as:

• • Look for some good alternative sources, for example new oil supplies from Antarctica.
  • Looking for alternatives, for example using solar panel cars.

• Demand Curve over time

In the short run, demand is price inelastic. For example someone who uses a gasoline car, must still buy gasoline. However, with time, people can buy electric cars or bicycles, therefore, the demand for gasoline falls. Demand will be more price elastic over time. Therefore, in a free market, there are incentives for market mechanisms to deal with the problem of scarcity.

• Potential market failure

a company that doesn't think about future supply. goods are determined by price, so some people can't afford certain goods. Therefore, economics also emphasizes the redistribution of income to help each individual to be able to buy production of CO2 emissions causes global warming, rising sea levels which will exacerbate scarcity future.

• Tragedy

The tragedy of the commons occurs when there is overgrazing of a particular land or fields. Example: massive fishing which will reduce the fish population. And can cause scarcity.

• Quotas and scarcity

One solution to overcome scarcity is to apply a quota of how many people can buy an item.

The issue of quotas can refer to the black market, because in order to obtain certain goods, some people are willing to pay high amounts for these goods.

• Double trouble

Because needs can be subjective, this concept applies in several conditions, for example:

• • Individuals or groups living in absolute poverty in a developing country.
  • Individuals or groups who are in relative poverty elsewhere (for example: after losing their jobs, getting divorced, or otherwise)
  • Individuals or groups who are aware of sinking bills that must be paid before the next check for payment.

• Influence Thought

When we experience scarcity, the mental bandwidth (mind focus) will decrease. This will make us vulnerable to a number of bad results. We tend to do bad things at some point.

For example: failing a mental agility test, showing impulsivity, poor self-control, being easily irritated, and being able to speak impolitely.

• Inhibiting Optimal Behavior

This decrease in mental bandwidth will then lead to bad behavior or decisions which will then lead to losses.

Case in point: being short of money can make it difficult for someone to make the best choices that are useful for improving their financial position again.

How to Overcome Scarcity

There are several ways to deal with scarcity, including:

• Save the use of natural resources.
• Maintaining and conserving natural resources with good control.
• Creating new means of satisfaction in the form of substitute goods (substitute goods).
• Improving the management of various kinds of natural resources, so that it will be more useful for human life.

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