| Definition |
A condition where resources are limited in relation to wants and needs. |
A condition where resources or goods are available in more than sufficient quantity. |
| Economic Role |
Core concept of economics; leads to the need for allocation and choices. |
Reduces the need for allocation decisions; less economic concern. |
| Resource Availability |
Limited or insufficient supply of goods, services, or factors of production. |
Plentiful supply that exceeds demand or needs. |
| Effect on Prices |
Usually leads to higher prices due to high demand and low supply. |
Usually leads to lower prices or even waste if supply exceeds demand. |
| Consumer Behavior |
Consumers compete; may lead to rationing, prioritizing, or saving. |
Consumers are more relaxed; often leads to increased consumption or waste. |
| Production Impact |
Firms must prioritize resource use and improve efficiency. |
Firms may experience reduced costs but risk oversupply. |
| Government Role |
May intervene via subsidies, rationing, or price controls. |
May focus on storage, distribution, or export management. |
| Decision-Making |
Leads to opportunity cost and prioritization of alternatives. |
Fewer trade-offs; easier decision-making. |
| Market Signals |
Signals scarcity through rising prices and supply gaps. |
Signals abundance through falling prices and inventory buildup. |
| Example |
Scarcity of clean water in drought-prone regions. |
Abundance of seasonal fruits during harvest time. |
| Impact on Innovation |
Encourages innovation to optimize use of limited resources. |
Less pressure to innovate; focus may shift to managing surplus. |
| Labor Impact |
High competition for limited job roles or skilled workers. |
More employment opportunities or less competition. |
| Distribution Needs |
Careful and equitable distribution becomes crucial. |
Distribution may be easier but prone to inefficiencies. |
| Risk of Crisis |
High—may lead to economic, social, or political crises. |
Low—unless mismanagement leads to dumping or price collapse. |
| Psychological Impact |
Creates urgency, stress, or hoarding behavior. |
Creates comfort, ease, or even complacency. |
| Opportunity Cost |
High; every choice has a significant trade-off. |
Low; choices are less constrained by resource limits. |
| Environmental Impact |
May promote sustainable use and conservation. |
May lead to overuse, waste, or ecological imbalance. |
| Role in Planning |
Essential for planning and resource allocation. |
Less pressure in planning; focus shifts to management and efficiency. |
| Economic Value |
Higher due to limited supply and high demand. |
Lower due to oversupply or minimal marginal utility. |
Scarcity vs Abundance