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What Is the Relationship between Scarcity and Choice?

By Jacob Queen
Updated May 16, 2024
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Scarcity and choice are fundamentally related because they are driving forces behind many economically-oriented human behaviors. The fact that most resources are limited to some extent forces people to make tough decisions, and it also has a direct affect on the pricing of things people want. For the purposes of this definition, resources could be anything from money, to goods, time, or even more abstract things like patience.

Most things that people want are limited, and this is the reason why scarcity and choice are very important to economic theory. For example, it takes time, manpower, and a host of materials to build a television set, and all those things only exist in limited quantities. Manufacturers are generally forced to take these things into consideration when they price items. Additionally, when people go to buy a television set, they tend to have a limited quantity of money to spend, so they have to make a decision about whether they want a television bad enough to spend as much as the manufacturer is asking.

One of the more important variations in the issue of scarcity and choice is that scarcity can change quite a bit over time and there is often a lot of price fluctuation. For example, bad weather during the growing season can make some crops temporarily scarce, driving up prices. This forces people to make tougher choices about how to use their money when buying food. If scarcity becomes too great and a massive shortage occurs, prices will generally rise enough so that only people with the greatest amount of money can afford an item, and this is how decisions about distributing scarce items are made in many capitalist economies.

The resources involved in the issue of scarcity and choice don't actually have to be as simple as manpower, time, money, or supplies. Sometimes, they can be very abstract ideas and feelings. For example, if a person has to wait a long time for something good to happen, or if attaining something is very difficult, his patience or willpower might become a scarce resource. If he has to spend too much patience or willpower, he might simply decide that the item isn't actually worth attaining. In many cases, the issues involved in the scarcity and choice equation might also be very complex, involving a combination of both abstract and more substantial factors in the decision-making process.

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Discussion Comments

By literally45 — On Feb 04, 2014

Does the economic theory of scarcity and choice assume that consumers are rational decision makers?

Ideally, everyone should weigh the costs and benefits before choosing a product or service, but I'm not so sure that's the case. With every choice, there is definitely something lost, an alternative. But some people don't choose based on economic factors.

For example, my dad refuses to use anything but an American made car due to patriotism. An American car may be more expensive and not as good quality as a Japanese car, but my dad will still choose the American car over the Japanese car. It's not very rational but I think many consumers make choices this way.

By SarahGen — On Feb 04, 2014

@ddljohn-- But what about time? Time is a resource and it's not an unlimited one. Manufacturers can only make so many TVs per day. And this affects consumer's choice.

By ddljohn — On Feb 03, 2014

I think scarcity is often used interchangeably with shortage. When we talk about scarcity and choice, we're actually talking about shortage and choice. Shortage is when there isn't enough of a resource that more can be made of. Scarcity is when there isn't enough enough of a resource of limited quantity such as water or petrol.

Even though manufacturers can make more TVs, they can't make them all at once. Or they may not choose to make many because that will also lower the price of TVs and lower their profits.

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