Difference Between Similar Terms and Objects

Difference Between Scarcity and Shortage

Scarcity vs Shortage

The terms “scarcity” and “shortage” should all be viewed with reference to the concepts of microeconomics since looking at both using the layman’s point of view will make the two almost interchangeable. So these two concepts are very interrelated and have something to do with the model of supply and demand. “Demand” is the desire coming from consumers towards a particular good or service while “supply” is the availability of the latter. These concepts are used to gauge market prices that should more or less be at a point that makes demand equal to supply.

Yes, all resources or goods are scarce. They are naturally limited! Scarcity is, therefore, based on the premise that there really are a limited number of goods or services. On the contrary, a shortage is backed by the seller’s decision to withhold the sale of certain products at their current price tag. You can actually solve this issue by raising prices or by importing foreign products of the said product.

When something is scarce, this directly implies that you don’t have the raw materials to produce, manufacture, or make a product. So if there is so much demand for a certain good or service while the resources to make that product or service are scarce, then there is a scarcity of the service or product. Because of this, the market will shoot up its selling price until the time will come when the purchase price will equal the current supply.

A concrete example is the case of avocados, a seasonal fruit. During its peak season, its selling price is cheap because there are lots of available avocados in the market. When the season starts to go away, the avocado price begins to rise because of the sudden drop in its supply. When it’s already out of season, there will be a scarcity of avocados.

A good example for a shortage is when oil companies suddenly increase the prices of gas products. Consumers will be forced to trim down their gas consumption to avoid the increasing prices. So the government will help the consumers by placing excess profits taxes on the said companies paving the way to fixed gas prices. Because of this, they become unwilling to sell more gas products at the amount adjusted by the government even if they have plenty of gas in supply. The result is less gas circulating in the market creating busy lines just to purchase gas and possible rationing. Thus, there’s a gas shortage.

Summary:

1.Scarcity is a natural-occurring phenomenon. It is always there.
2.Shortage is a choice made by man.
3.Shortages can be controlled through importing (products under shortage) from foreign countries.
4.Shortages can be adjusted by raising the price of a good or service.


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