beginning to understand. For example, abundance is a relative term but it is not
inconsistent with scarcity; all resources are scarce. The perception of abundance
without the recognition of inherent scarcity of resources can hasten resource
depletion.
Resources are broadly defined as including all the inputs in the production of final
goods and services that are ultimately tied to the satisfaction of a want. From this
perspective, resources could include teak wood trees in the making of furniture,
water in the production of soda, and cattle in the production of food. Typically,
resources are classified into one of three groupings, which include natural resources,
human resources, and capital resources. Trees, water, and cattle are all natural
resources. Human labor or entrepreneurship defines human resources and capital
resources consist of man-made objects that can be used to produce goods and
services, such as factories and equipment. Regardless of the type of resource, all
resources are finite and so by definition can be qualified as scarce (Venkatesan 2016;
Czech 2000; Choi and Ng 2011).
Scarcity in economics essentially captures the relationship between wants and the
access and availability of resources. For example, one could want a mango, see it
hanging high on a tree but not have a ladder to reach it. The good in question is
available but it is not accessible. Alternatively, one could stumble on a farmer’s
market selling mangos only to find that all the mangoes on display have been
purchased. In this case, the mangos are accessible but they are not available. Both
of these examples highlight the temporal or time sensitivity of scarcity. In the first
example, one could borrow or purchase a ladder but this will take time and in the
second scenario, one can drive or walk to another market, but again, additional time
will be required to satisfy the want.
Looking at time in a slightly different manner, a community could require lumber
for the construction of new municipal buildings. The lumber required will result in
the deforestation of one hundred acres. In satisfying the want for lumber today, the
community limits access and availability of lumber from the one hundred acres over
the time period required for the forest to regenerate, creating time-based scarcity.
2.10 Market Distortions, Externalities, and Failure of Market
Equilibrium
In a market system, access and availability establish a perceived scarcity embedded
within the supply of a good. Ultimately, the supplier’s willingness and ability to sell
a specified amount of a good at a prevailing price are assumed to capture the costs of
production of the good, implicitly including the scarcity of inputs. As a result, it is
expected that the higher the degree of perceived scarcity of a resource, the higher its
price and in the case of an input, the resulting price of the final good.
The production of goods by producers is based on a competitive framework.
Additionally, the producer seeks to minimize costs and maximize revenue, to
achieve maximum profitability. As a result of the focus on profitability, there is
significant incentive for producers to externalize costs of production as a means of
2 The Role of Culture and Moral Responsibility in Facilitating a Sustainable. . .
25
inconsistent with scarcity; all resources are scarce. The perception of abundance
without the recognition of inherent scarcity of resources can hasten resource
depletion.
Resources are broadly defined as including all the inputs in the production of final
goods and services that are ultimately tied to the satisfaction of a want. From this
perspective, resources could include teak wood trees in the making of furniture,
water in the production of soda, and cattle in the production of food. Typically,
resources are classified into one of three groupings, which include natural resources,
human resources, and capital resources. Trees, water, and cattle are all natural
resources. Human labor or entrepreneurship defines human resources and capital
resources consist of man-made objects that can be used to produce goods and
services, such as factories and equipment. Regardless of the type of resource, all
resources are finite and so by definition can be qualified as scarce (Venkatesan 2016;
Czech 2000; Choi and Ng 2011).
Scarcity in economics essentially captures the relationship between wants and the
access and availability of resources. For example, one could want a mango, see it
hanging high on a tree but not have a ladder to reach it. The good in question is
available but it is not accessible. Alternatively, one could stumble on a farmer’s
market selling mangos only to find that all the mangoes on display have been
purchased. In this case, the mangos are accessible but they are not available. Both
of these examples highlight the temporal or time sensitivity of scarcity. In the first
example, one could borrow or purchase a ladder but this will take time and in the
second scenario, one can drive or walk to another market, but again, additional time
will be required to satisfy the want.
Looking at time in a slightly different manner, a community could require lumber
for the construction of new municipal buildings. The lumber required will result in
the deforestation of one hundred acres. In satisfying the want for lumber today, the
community limits access and availability of lumber from the one hundred acres over
the time period required for the forest to regenerate, creating time-based scarcity.
2.10 Market Distortions, Externalities, and Failure of Market
Equilibrium
In a market system, access and availability establish a perceived scarcity embedded
within the supply of a good. Ultimately, the supplier’s willingness and ability to sell
a specified amount of a good at a prevailing price are assumed to capture the costs of
production of the good, implicitly including the scarcity of inputs. As a result, it is
expected that the higher the degree of perceived scarcity of a resource, the higher its
price and in the case of an input, the resulting price of the final good.
The production of goods by producers is based on a competitive framework.
Additionally, the producer seeks to minimize costs and maximize revenue, to
achieve maximum profitability. As a result of the focus on profitability, there is
significant incentive for producers to externalize costs of production as a means of
2 The Role of Culture and Moral Responsibility in Facilitating a Sustainable. . .
25