What is relative scarcity in economics?
Back to basics in the topic of economic scarcity. Relative scarcity is the situation in which the consumers are not able to get/buy all goods and services they desire due to the first rule/condition of scarcity of resources in production of goods/services in the economy that leads to inability of economic active producers to fulfill all demands for all goods or the level of production of goods ie amount of goods as society demands. In other words, household/consumers/the society in whole, are tied up with constraint which limits/circumscribes their access to buying/possessing all goods of interest and the quantity. All is due to the scarcity of resources, namely, property resources and human resources. Break these two into more narrowed categories, you get;
- Capital. Real and financial. Tools of trade/ productions of economic goods/output. Count in ‘land' as well.
- Labor. Needs for physical, mental, intellectual or specificly entreprenurial capability as inputs for economic production processes.
- Some schools of economists separate labor from human resources in different individual categories. They treat human resources as a special one category as they do to the labor category.
Relative scarcity in economics means that there are no resources left in the country to be utilised. The country has reached its saturation level and now it has no other option left except taking loans from the banking sectors of its country or from the world banking institutions such as IMF or World Bank. In such a situation country in order to continue its survival will look up for imports and external help from other countries.
As we know resources are limited and wants are unlimited. The other reason for relative scarcity could fuller utilisation of resources. .
In economics, the fundamental assumption about consumption is that more is always preferred. Scarcity is another word for that notion. Whenever a good can command a price (above zero) it is scarce.
The concept is not one of poverty; it's a matter of allocation of limited (scarce) resources. If the resources were available for free without limit, they would not be scarce. The "relative" scarcity is just a measure of relative prices. In these matters, everything thing is about ratios (relative measures).