The Difference Between Scarcity and Shortage

Scarcity and shortage are two terms that are easy to confuse with each other. Scarcity is anything that is available in short supply. Scarcity is a natural occurring limitation on a resource that can't be replenished. It comes from the fact that humans have unlimited wants and our resources are limited. Humans therefore have to make decisions on how to allocate their resources. Figuring out the best ways to use our scarce resources is one of the fundamentals to economics.

An example of a scarce resource currently is freshwater. Canadians are second highest freshwater consumers per capita in the world, second only to the United States.  In Canada the average person uses 329 litres of fresh water a day. Even though, Canada is considered wealthy in terms of freshwater, more than 60% of our freshwater is located in the North where few people live. This water also flows to the North, away from where most humans live. Due to climate change, more water is evaporating, and the Great Lakes water levels are at a historic low. Due to this, water is becoming more and more a scarce resource.

Whereas, a shortage happens when producers cannot offer goods and services at their current prices. Over time, the good will be replenished and the shortage should be solved. It is the opposite to their being a surplus. Reasons for a shortage to occur are:

1. An increase in demand
2. A decrease in supply
3. Government Intervention




An example of a shortage occurring from an increase in demand is when the book, The Cuckoo's Calling was released under the name Robert Galbraith, it saw few sales but as soon as word got out that it was written by J.K Rowling the book instantly started selling out, causing a shortage because of the sudden increase in demand.




The prohibition is an example of shortage cause by a decrease in supply and government intervention. In 1918, the Canadian government banned the consumption and traffic of alcohol. This lead to a greatly reduced the available supply of liquor, but you can also see that people work around anything, as the black market for alcohol was created. 

In conclusion, you can see that when resources become scarce it's a normal occurrence that usually doesn't occur from human interference while shortages exist only from human interference.

http://youtu.be/V2WYuomjKfc

Works Cited

"The Cuckoo's Calling". Digital image. n.d.  CUCKOO’S CALLING and Disconnecting the Author from the Text. Book Riot . 19 Oct. 2014.

"Ebola Blamed for Senegal Sheep Shortage. Ebola Blamed for Senegal Sheep Shortage". Youtube. Youtube, n.d. Web. <https://www.youtube.com/watch?v=V2WYuomjKfc> 19 Oct. 2014.

Keys, Roberta."Human Population Growth Chart". Digital image. n.d. "Scarcity and the Economic Problem" Tutor2u. 19 Oct. 2014.

Prohibition protest. Digital image. n.d. "PROHIBITION IN VERMONT AND THE CREATION OF THE POWDER ROOM" Vermont. Web. 19 Oct. 2014.

"Scarcity Definition | Investopedia." Investopedia. 2014.<http://www.investopedia.com/terms/s/scarcity.asp>.Web. 19 Oct. 2014. 

"The Scarcity of Freshwater | Eco Options | Home Depot Canada." Home Depot Canada.  <http://www.homedepot.ca/eco-options/how-to/water/kitchen-and-bath/the-scarcity-of-freshwater>. 19 Oct. 2014.

"Supply and Demand Examples." YourDictionary. Love to Know. <http://examples.yourdictionary.com/supply-and-demand-examples.html>. 19 Oct. 2014. 

Wells, Kallie. "Shortage & Scarcity in Economics: Definition, Causes & Examples." Education Portal. 2013.  <http://education-portal.com/academy/lesson/scarcity-in-economics-definition-causes-examples.html>. 19 Oct. 2014.