Main difference between scarcity and shortage is that, scarcity means limited resources availability to meet unlimited human wants while a shortage means a product’s supply is less than its demand. Let’s summarize the difference between shortage vs scarcity in a table.
Scarcity vs Shortage – Table comparison
|Factor to compare||Scarcity||Shortage|
|Definition||The Scarcity is a general condition that there aren’t enough to satisfy basic human needs and wants.||Shortage is the situation market’s supply of a specific good or service is insufficient to match the quantity demanded at a given moment|
|Reason to occur||Scarcity occurs when something is rare and difficult to produce||A shortage occurs when the demand for a good is higher than the supply for it.|
|Permanent or temporary||Scarcity a permanent scenario. It cannot be eliminated||Shortage a temporary scenario. It can be eliminated|
|Who created?||Nature creates the scarcity||Market forces creates the scarcity|
|Type of the concept||A basic concept in economics||A specific concept for market forces.|
|Overcome||It is not easy to end the Scarcity. Because it I very difficult to produce scarce resources.||We can easily eliminate a shortage by dealing with the suppliers to make the products.|
Definitions of scarcity and shortage
Let’s briefly discuss about the meaning of scarcity and shortage.
What is Scarcity?
Scarcity definition in economics
In the field of economics, the term “scarcity” is used to describe finite resources or the sense of scarce resources when there aren’t enough to satisfy basic human needs and desires. As a result, entities are pressured to choose the most effective way to distribute a limited resource so that the majority of needs and wants can be satisfied. The fundamental economic issue of scarcity is that there aren’t enough resources to provide all we need. It is the circumstance in which our desires outweigh the means available to fulfil them.
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The goal of all economic activity is to find a solution to the scarcity issue. Despite the fact that it takes a while for resources to replenish, the problem of scarcity is severe. To make the best use of the limited resources available, we must decide which wants should be met first. Resources that are finite and cannot be replaced by production or importation
What is Shortage?
Shortage definition in economics
We refer to a situation as a “shortage” when the market’s supply of a specific good or service is insufficient to match the quantity demanded at a given moment. Simply put, a shortage is what economists refer to when the demand for a good or service exceeds the supply. A scarcity is a transient problem that will eventually be resolved by the market. Shortages happen when a product’s open market accessibility to customers is manipulated. A shortage indicates that the market is out of balance. The quantity supplied and the quantity required at the market price are equal at the point of equilibrium.
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This may result in price increases and, in severe circumstances, rationing. Numerous things, such as wars, embargoes, natural disasters, and financial crises, can result in shortages. They can also happen when a nation’s capability for production is insufficient to meet the needs of its people. Shortages can have detrimental effects, including famine, civil upheaval, and inflation. Governments and international organizations frequently keep a close eye on them as a result.
By raising the price of the product, the sellers can address the shortage and bring supply and demand into balance. In order to prevent a shortage in the economy, the items can also be imported from other nations.
The primary difference between scarcity vs shortage is that scarcity refers to the limitation of something in its natural form, while shortage describes a circumstance in which the necessary good cannot be acquired at the time.
Examples of Scarcity and Shortage
The following examples clearly explain the difference between scarcity vs shortage.
There are limited resources in oil, land, natural gas, water, precious metals, and minerals.
Some fish species may become scarce due to overfishing.
There are only a finite number of non-renewable energy sources, including coal.
Power shortage; A situation where electricity production is not enough to cover electricity consumption.
Healthcare shortage; The healthcare industry is experiencing a shortage of doctors at every level due to the COVID-19 pandemic.
Food shortage; A food shortage occurs when food supplies do not provide enough food for the population.
Similarities between Scarcity and Shortage
As we discussed above, there are many differences between shortage and scarcity. But we can see a few similarities between scarcity and shortage. Let’s discuss them.
When either scarcity or shortage occurs, the price of the good often rises since the demand is greater than the supply.
Trade-offs: Both scarcity and shortage force individuals and society to make compromises, such as selecting between various goods and services or resource uses.
Limited supply of resources: The terms scarcity and shortage both describe a limited supply of resources or goods.
Economic impact: Both shortage and scarcity may have detrimental effects on the economy, including price inflation, restricted access to goods and services, and heightened competition.
Both of shortage and scarcity can be temporary or permanent: Short-term or long-term events can both exist in terms of scarcity and shortage.
Both scarcity and shortage have an impact on how resources are allocated as well as who has access to them.
What is the difference between Scarcity vs Shortage?
- Scarcity is a state in which a resources are available in a limited amount. A shortage denotes a scenario in which a product’s supply is less than its demand. This is the main difference between scarcity vs shortage.
- Natural resources that deplete over time, such as time, oil, land, etc., are said to be scarce. But shortages affect commodities or services produced by humans.
- In so far as producers or sellers are unwilling to provide goods or services at the going rate, shortages are man-made. When prices are raised, these shortages disappear. Contrarily, scarcity describes a circumstance in which the quantity of a good is genuinely restricted and unable to satisfy the limitless needs of the populace. For instance, when the population grows, land becomes more expensive.
- When something is hard to duplicate and rare, it is said to be scarce. Shortage, on the other hand, shortage occurs when a popular and easily accessible good does not always meet demand.
- Scarcity cannot be eliminated. There will always be one. Some goods and services are still hard to come by, even at zero prices. For instance, Picasso’s art is too rare and insufficient to be freely handed out; therefore, you cannot hope to offer it to everyone who requests it. On the other hand, a shortage can be eliminated. An entire nation may experience severe shortages when a crop fails. However, importing that crop from other nations can make up for this output shortage.