Glamor Economics

Chapter 20

Chapter 4 What Makes Markets Work—Demand and Supply
Section 1 There is no free lunch in the world - scarcity

Scarcity is an important concept in economics.We all know that human needs are unlimited, but material is always limited.Some items that satisfy this desire can be obtained at will without paying any price, which are called "free access items", such as sunlight and air, etc.; but the vast majority of items are not freely available, and you must pay a certain amount to obtain them. This price is called "economic goods", including character resources and material resources.Economic goods, or the resources to produce them, are scarce relative to the inexhaustible desires of human beings.This natural limitation in obtaining what people need is called "scarcity", so economic goods are also called "scarce goods".

Therefore, scarcity is not in terms of the absolute quantity of resources and items, but in terms of limited resources and items relative to human desires. It is relative; but it is also absolute and exists anywhere and in any human Time is an eternal problem for human beings.The rarer things are, the more valuable they are, as the saying goes, "Things are rarer and more expensive".For some scarce products, the price is often jaw-droppingly high.

在2009年新版的《吉尼斯世界纪录》中，卡塔尔电信运营商被认定拍出了全球最昂贵的手机号码。一个6666666的手机号是于2006年5月23日被拍卖的，最终成交价格为1000万里亚尔，根据当时汇率水平计算约合275万美元。《吉尼斯世界纪录》此前记载的最昂贵的手机号码是中国四川航空以48万美元拍得的88888888手机号。

Spending money to buy real estate, cars, etc., these are real items, or have a certain use value, or have the potential to appreciate in the future; spending money to buy services can also get real enjoyment.The sky-high price of mobile phone numbers is neither a real item nor a real service. People are so fanatical in pursuing numbers that are worthless in themselves, and even pocket them at all costs. What are they trying to do?

We can analyze it from the perspective of resource scarcity.These numbers are often formed due to homonyms or traditional thinking habits. For example, many people in our country believe that the word "8" can bring them good luck, mainly because 8 is homophonic to "fa", "168" (一路发), Numbers such as "888" (fafafa) and "518" (I want to send) are very popular among people.But these numbers are limited after all, and limited resources cannot satisfy everyone.Therefore, under the premise of scarce resources, these auspicious numbers must be obtained at a high price.This is also a proof of "rare things are more expensive".

The scarcity of resources, some are natural, such as gold, diamonds, etc.; some are derived, such as arable land, with the increase of population, the per capita arable land is getting less and less.

Scarcity plays a vital role in the entire economic theory. Some economists believe that scarcity is the prerequisite for the existence of economics, so they often use scarcity to define economics.The existence of scarcity determines that people continue to make choices in the use of economic goods, such as deciding what to use limited resources to produce, how to produce, for whom to produce, how to choose between scarce consumer goods, and how to use them to meet people's needs. Various needs, these questions are considered the subject of economics research.

[links to related words]

The effective allocation of resources refers to the optimization of resource utility.Optimization refers to the process of resource utilization not only to give full play to its own benefits, but also to coordinate with other resources to produce more effective social products.

A Pareto-optimal society reaches a state where no change can make anyone better off without changing their situation.For a long time, Pareto optimal conditions have become the center of research by welfare economists. After continuous development and supplementation, a relatively systematic theory of optimal conditions has been formed.

(End of this chapter)