Scarcity and Choice
For almost all of the world’s 7.6 billion people, scarcity is real and ever-
present. As we said earlier, relative to our desires, existing resources are
inadequate; there are enough to produce only a fraction of the goods and
services that we want.
But aren’t the developed nations rich enough that scarcity is no longer a
problem? After all, they are “affluent” societies. Whatever affluence may
mean, however, it does not mean the end of the problem of scarcity.
Canadian families that earn $75 000 per year, approximately the median
after-tax income for a Canadian family in 2019 but a princely amount by
world standards, have no trouble spending it on things that seem useful to
them, and they would certainly have no trouble convincing you that their
resources are scarce relative to their desires.
Because resources are scarce, all societies face the problem of deciding
what to produce and how much each person will consume. Societies
differ in who makes the choices and how they are made, but the need to
choose is common to all. Just as scarcity implies the need for choice, so
choice implies the existence of cost. A decision to have more of one thing
is necessarily a decision to have less of some other thing. The cost of the
more of one thing is the amount of the other thing we must give up in
order to get it.