Scarce Resources - Essay Example

Scar is one of the serious problems that the science of economics faces. It is at the heart of the science's core issues that its founders have been intending to manage and solve. It is a given fact that the resources-whether natural, material, or human-an economy has is limited. Though some resources are renewable, still it takes time to replenish them after their consumption. We cannot entirely and exhaustively use the resources that we have for we may not use it afterwards. We have to accept the fact that scarcity, the impossibility of not getting one's need's and wants, is inescapable and unavoidable in our daily lives. Yet despite the fact that resources are limited, humans are prone to desire things beyond his/ her apparent needs. He has the tendency to demand resources even though he does not need them. He may need a mobile phone. But, due to the enticements he receives from TV commercial and other forms of advertisements, he might want more features and capabilities of this product that is beyond his personal and professional needs. The truth that resources are scarce and humans have unlimited wants comprise the economic definition of scarcity. According to Investopedia, scarcity is "the basic economic problem which arises from people having unlimited wants while there are and always will be limited resources." Scarcity is an economic fact that points out the global condition wherein human wants outnumbers "the available supply of time, good and resources (Scarcity vs. Abundance)." This is the fact on which the science of economics is founded on. Resources, especially the non-renewable ones, are limited in its existence. It is therefore the job of the economists and managers to use them efficiently and effectively for the extending its use in its fullest potential. In all aspects and all levels of the economy managing the scarce resources plays a vital role. From households, community, to the national and the international level, proper allocation, distribution, and use of resources is very much needed. Whether it may be the buying of ingredients used for cooking a meal or imposing tariffs and other international trade policies on different commodities and services, effective management of resources is a critical responsibility shouldered by the household managers. For efficient resource distribution economists should do various economic decisions. Usually economic managers, from a household to a global setting are obliged to make trade-offs to maximize the use of different resources. Trade-offs are made when choices are made (collectively or by an individual) to get less of one resource to get more of others (Johnson). If, for example, a mother has to choose between purchasing bread and mayonnaise for her household, she has to make sure that the trade off made will be beneficial to optimize the satisfaction of her family. To evaluate the effectiveness of trade-offs made, opportunity costs should be highly considered. Opportunity cost is the highest esteemed or valued alternative that must be sacrificed to get something. In our last example the mother might consider that the value of bread is greater than the value of the mayonnaise on the basis that it is consumed more. The opportunity cost will be greater if the mother buy more mayonnaise than bread. In this scenario, we can say the trade-off is not economical. Scarcity in Households Jelin (1990) considers a household as social unit consisting of "undifferentiated set of individuals who equally share all activities linked to its maintenance." It is the most basic of social organizations, "a microcosm of relations of production, reproduction, and distribution." In a household setting, the allocation and distribution of resources is dynamic depending on its adaptation to internal and external influences. Daily activities in a household are highly influenced by political, social and other institutions. With all these changes in a household's daily activities the need of effective resources management is very necessary. Management of family income and expenditures is the basic role of the household manager. How to fit the household income within the budget is the primary duty of the household manager. Scarcity in a Firm A business firm's man reason for existence is to produce goods or services for the benefit of consumers in exchange for profits. Businessmen efficiently utilizes scarce resources to produce a manufactured or improved product for the ease of use and for the improvement of the lives of their consumers. What a household experiences in an economy is also felt by business firms. While a mother budgets of expenditures and manages of acquired goods, a business manager allocates the resources so that it will incur the least cost and maximum profit. It is the managers' responsibility to distribute the factors of production so that they are efficiently and optimally utilized in the course of the production of goods and services. Entrepreneurs and managers should see to it that land, labor, capital and entrepreneurial skills. Scarcity in Government Aside from business firms, the government also has the task of managing the resources of the nation as a whole. The income they receive from taxes, treasury bills and other financial instruments should be allocated properly to sustain maintenance and other expenditures of the government to maintain the social and economic stability of a nation. The nation's economic managers lay down a policy that will show the government's plan on how to spend the collected taxes and other government income sources. This is to avoid indiscriminate spending that could be detrimental to a nation's economy and welfare. Scarcity in Global Economy The 1997 Asian Financial crisis opened up the eyes of different nations on the extent of economic problem that will most likely ensue if governments of different nations haphazardly manage global economic activities. Now that international economic and political relations are tightened further because of globalization, treaties and other economic agreements among various nations should facilitate international economic activities and maximize the use of resources in the global scene. Global negotiations and policies in trade and other business activities should be effectively undertaken to safeguard the imbalanced allocation and distribution of goods and services. Works Cited Jelin, Elizabeth "Household organization and expenditure in a time perspective: social processes of change." 1990, The United Nations University 10 Jan. 2007 Johnson, Paul M. "Cost." Auburn University. 10 Jan. 2007 -------. "Trade-off" Auburn University. 10 Jan. 2007 "Scarcity" 2007. Investopedia. 10 Jan. 2007 Read More