is the study of how every business, person, and government allocates their limited resources. A resource must be useful to be classified as a resource. Chances are new economic students have covered the economic principle of scarcity
in their first lesson. If a resource is not scarce, it means it is readily available at no charge. Can you identify a resource that is not scarce? Listed below are several of the suggestions made by my students.
When I was young, I felt as if time was an unlimited resource. I would never get older. Boring classes seemed to make time stand still. However, time is very limited. We must make decisions on how to allocate our time because it is scarce. Students may choose to spend time hanging out with friends or studying for an economics test. Both opportunities disappear in time, and there is a cost for not choosing one of them. Economists refer to this as an opportunity cost
. The cost of studying is sacrificing the enjoyment of hanging out with friends. The cost of hanging out with friends instead of studying is forgoing a better grade on the economics test. Most older people cherish the time they spend with their families more now than thirty years ago. Why? Because they recognize the scarcity of time and value it more. Time is a scarce resource.
No. Water is a scarce resource – especially when referring to clean water. Water must be allocated. The water table in the western US has fallen to dangerous levels. Water prices have increased to deal with the shortage (scarcity) of water. Farmers spend money to irrigate their lands. Some may argue that floods prove that water is not a scarce resource. Destructive flood waters are not useful, so flood waters are not classified as a resource. Flood waters can sometimes be controlled and used as a resource, but there is a cost to restrain the water. When I was a child I never imagined paying money for a glass of water. Today, bottled water is one of the fastest growing segments of the beverage industry. Water is a scarce resource.
Most of us do not have to pay for the air we breathe. We do not worry about the supply of air. Yet clean air is a scarce resource. The cost is the health hazard. Listed below is the estimated benefit of the Clean Air Act, but the cost is $65 billion.
The 1990 Clean Air Act Amendments
Source: EPA - 1990 Clean Air Act
Money for the Wealthiest Individuals
Wealthy individuals do not have to worry about their daily needs. However, their resources are not endless. They must decide how to allocate their money. Where should they invest? Which charities should they donate to? How much do they want to give to each charity? These decisions must be made because money is limited - even for the wealthiest of individuals.
Money for Governments
Governments can print money, so if they are running low on funds they can just print more. Therefore, money is not scarce. Wrong. Several governments have made policies that led to ruin because they did not recognize the scarcity of money. The Venezuelan government has ruined its economy and the lives of many citizens because they behaved as if money is not scarce. The government bribed its citizens and printed money to pay for its needs causing an inflation rate exceeding 1,500 percent and a serious shortage of food and health care. Government money is a scarce resource - even when they can print currency.
An Unlimited Resource?
So what resource is unlimited? Christians believe God's amazing grace is never-ending and always sustaining. Apart from God, we are all unrighteous sinners in need of Jesus's saving grace. Romans 3:23-24 says, For all have sinned and fall short of the glory of God, being justified as a gift by His grace through the redemption which is in Christ Jesus.
But once we are in Christ, we are pure and blameless in God's sight, and Romans 8:1 reminds us that there is no condemnation left for us. For Christians, this means that every past, present, and future sin that we commit will not be held against us because we have been set free from our sin by God's grace, and His grace will never run out. But God's amazing, never-ending grace, while free for us, it was not free. Jesus paid for us when he died on the cross. In response to His unlimited grace, we should strive to obey God and honor Him in all that we do!