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53-553: [REDACTED] Look up rarity in Wiktionary, the free dictionary. Rarity may refer to: Concepts [ edit ] Economic rarity , or scarcity, the economic problem of human want exceeding limited resources Species rarity , the position of species organisms being very uncommon or infrequently encountered People [ edit ] John Rarity , an English physicist Fictional characters [ edit ] Rarity,

106-837: A population die off . It derives from the political and economic thought of the Malthus, as laid out in his 1798 writings, An Essay on the Principle of Population . Malthus believed there were two types of ever-present "checks" that are continuously at work, limiting population growth based on food supply at any given time: Daoud argues that There are two types of scarcity implicit in Malthusianism, namely scarcity of foods or "requirements" and objects that provide direct satisfaction of these food needs or "available quantities". These are absolute in nature and define economic concepts of scarcity, abundance, and sufficiency as follows: Lionel Robbins

159-451: A PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good. Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the PPF. The marginal rate of transformation can be expressed in terms of either commodity. The marginal opportunity costs of guns in terms of butter is simply the reciprocal of

212-643: A character in My Little Pony Crystal Princess: The Runaway Rainbow Rarity, a character in My Little Pony: Friendship Is Magic Music [ edit ] Rarity (band) , a Canadian rock band See also [ edit ] Rarities (disambiguation) Rare (disambiguation) All pages with titles containing rarity Topics referred to by the same term [REDACTED] This disambiguation page lists articles associated with

265-399: A good determines its opportunity cost (say from mass production methods or specialization of labor ). From a starting point on the frontier, if there is no increase in productive resources, increasing the production of a first good entails decreasing the production of a second, because resources must be transferred to the first and away from the second. Points along the curve describe

318-486: A good to be considered nonscarce, it can either have an infinite existence, no sense of possession, or it can be infinitely replicated. Production%E2%80%93possibility frontier In microeconomics , a production–possibility frontier ( PPF ), production possibility curve ( PPC ), or production possibility boundary ( PPB ) is a graphical representation showing all the possible options of output for two that can be produced using all factors of production , where

371-591: A high production cost. It has to be found and processed, both of which require a lot of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one goal against others. In an influential 1932 essay, Lionel Robbins defined economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses". In cases of monopoly or monopsony an artificial scarcity can be created. Scarcity can also occur through stockpiling, either as an attempt to corner

424-455: A linear PPF: if there was only one factor of production to consider or if the factor intensity ratios in the two sectors were constant at all points on the production-possibilities curve. With varying returns to scale, however, it may not be entirely linear in either case. With economies of scale , the PPF would curve inward, with the opportunity cost of one good falling as more of it is produced. Specialization in producing successive units of

477-459: A point beneath the curve (such as A) indicates inefficiency, and a point beyond the curve (such as X) indicates impossibility. PPFs are normally drawn as bulging upwards or outwards from the origin ("concave" when viewed from the origin), but they can be represented as bulging downward (inwards) or linear (straight), depending on a number of assumptions. An outward shift of the PPC results from growth of

530-416: A sacrifice— giving something up , or making a trade-off —in order to obtain more of the scarce resource that is wanted. The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what". The price system, or market prices, are one way to allocate scarce resources. "If

583-404: A society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money" If other criteria are used, we would expect to see competition in terms of those other criteria. For example, although air is more important to us than gold, it is less scarce simply because the production cost of air is zero. Gold, on the other hand, has

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636-422: A view that is sometimes referred to as a Malthusian catastrophe . Malthus wrote in opposition to the popular view in 18th-century Europe that saw society as improving and in principle as perfectible. Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply or other resources is linear , which eventually reduces living standards to the point of triggering

689-506: Is 4. The production-possibility frontier can be constructed from the contract curve in an Edgeworth production box diagram of factor intensity. The example used above (which demonstrates increasing opportunity costs, with a curve concave to the origin) is the most common form of PPF. It represents a disparity, in the factor intensities and technologies of the two production sectors. That is, as an economy specializes more and more into one product (such as moving from point B to point D ),

742-450: Is called the marginal rate of transformation ( MRT ). The slope defines the rate at which production of one good can be redirected (by reallocation of productive resources) into production of the other. It is also called the (marginal) "opportunity cost" of a commodity, that is, it is the opportunity cost of X in terms of Y at the margin. It measures how much of good Y is given up for one more unit of good X or vice versa. The shape of

795-435: Is directly related to the shape of the curve (see below). If the shape of the PPF curve is a straight-line, the opportunity cost is constant as the production of different goods is changing. But, opportunity cost usually will vary depending on the start and end points. In Figure 7, producing 10 more packets of butter, at a low level of butter production, costs the loss of 5 guns (shown as a movement from A to B ). At point C ,

848-493: Is operating on the PPF is said to be efficient , meaning that it would be impossible to produce more of one good without decreasing production of the other good. In contrast, if the economy is operating below the curve, it is said to be operating inefficiently because it could reallocate resources in order to produce more of both goods or some resources such as labor or capital are sitting idle and could be fully employed to produce more of both goods. For example, if one assumes that

901-436: Is perhaps Walras ' definition of social wealth, i.e., economic goods. 'By social wealth', says Walras, 'I mean all things, material or immaterial (it does not matter which in this context), that are scarce, that is to say, on the one hand, useful to us and, on the other hand, only available to us in limited quantity'." British economist Lionel Robbins is famous for his definition of economics which uses scarcity: "Economics

954-438: Is relative scarcity that defines economics." Relative scarcity is the starting point for economics. Samuelson tied the notion of relative scarcity to that of economic goods when he observed that if the conditions of scarcity did not exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods, i.e. goods that are relatively scarce..." The basic economic fact

1007-422: Is required. In the PPF, all points on the curve are points of maximum productive efficiency (no more output of any good can be achieved from the given inputs without sacrificing output of some good); all points inside the frontier (such as A ) can be produced but are productively inefficient ; all points outside the curve (such as X ) cannot be produced with the given, existing resources. Not all points on

1060-508: Is shown by a shift of the production-possibility frontier to the right. Conversely, a natural, military or ecological disaster might move the PPF to the left in response to a reduction in an economy's productive capability. Thus all points on or within the curve are part of the production set : combinations of goods that the economy could potentially produce. If the two production goods depicted are capital investment (to increase future production possibilities) and current consumption goods,

1113-424: Is that this "limitation of the total resources capable of producing different (goods) makes necessary a choice between relatively scarce commodities." Scarcity refers to a gap between limited resources and theoretically limitless wants. The notion of scarcity is that there is never enough (of something) to satisfy all conceivable human wants, even at advanced states of human technology . Scarcity involves making

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1166-458: Is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." Economic theory views absolute and relative scarcity as distinct concepts and is "quick in emphasizing that it is relative scarcity that defines economics." Current economic theory is derived in large part from the concept of relative scarcity which "states that goods are scarce because there are not enough resources to produce all

1219-428: The marginal rate of transformation (slope of the frontier/opportunity cost of goods) is equal to all consumers' marginal rate of substitution . Similarly, not all Pareto efficient points on the frontier are Allocative efficient . Allocative efficient is only achieved when the economy produces at quantities that match societal preference. A PPF typically takes the form of the curve illustrated above. An economy that

1272-409: The production set for fixed input quantities, the PPF curve shows the maximum possible production level of one commodity for any given production level of the other, given the existing state of technology. By doing so, it defines productive efficiency in the context of that production set: a point on the frontier indicates efficient use of the available inputs (such as points B, D and C in the graph),

1325-562: The "disposition of the ... (stakeholder's)... time and resources has a relationship to (their) system of wants." The definition is not classificatory in "pick[ing] out certain kinds of behavior" but rather analytical in "focus[ing] attention on a particular aspect of behavior, the form imposed by the influence of scarcity." These are relative in nature and define economic concepts of scarcity, abundance, and sufficiency as follows: Economic theory views absolute and relative scarcity as distinct concepts and "...quick in emphasizing that it

1378-402: The PPF shows the options open to an individual, household , or firm in a two-good world. By definition, each point on the curve is productively efficient, but, given the nature of market demand , some points will be more profitable than others. Equilibrium for a firm will be the combination of outputs on the PPF that is most profitable. From a macroeconomic perspective, the PPF illustrates

1431-418: The PPF will shift inward if the labour force shrinks, the supply of raw materials is depleted, or a natural disaster decreases the stock of physical capital. However, most economic contractions reflect not that less can be produced but that the economy has started operating below the frontier, as typically, both labour and physical capital are underemployed , remaining therefore idle. In microeconomics ,

1484-479: The availability of inputs, such as physical capital or labour , or from technological progress in knowledge of how to transform inputs into outputs. Such a shift reflects, for instance, economic growth of an economy already operating at its full productivity (on the PPF), which means that more of both outputs can now be produced during the specified period of time without sacrificing the output of either good. Conversely,

1537-404: The available quantities of factors of production (materials, direct labor, and factory overhead). Only points on or within a PPF are actually possible to achieve in the short run. In the long run, if technology improves or if the supply of factors of production increases, the economy's capacity to produce both goods increases; if this potential is realized, economic growth occurs. That increase

1590-505: The capital-intensive good. Also a shift in the PPF could depict that there's an improvement in technology or good use of capital goods. Production-Possibility Frontier delineates the maximum amount/quantities of outputs (goods/services) an economy can achieve, given fixed resources ( factors of production ) and fixed technological progress. Points that are unattainable can be achieved through external trade and economic growth . Examples include importations of resources and technology, and

1643-463: The conditions of scarcity did not exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods , i.e. goods that are relatively scarce..." This economic scarcity is not solely due to resource limits, but a consequence of human activity or social provisioning. There are two types of scarcity, relative and absolute scarcity. Thomas Robert Malthus laid "the theoretical foundation of

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1696-413: The conventional wisdom that has dominated the debate, both scientifically and ideologically, on global hunger and famines for almost two centuries." In his 1798 book An Essay on the Principle of Population , Malthus observed that an increase in a nation's food production improved the well-being of the populace, but the improvement was temporary because it led to population growth, which in turn restored

1749-479: The curve are Pareto efficient , however; only in the case where the marginal rate of transformation is equal to all consumers' marginal rate of substitution and hence equal to the ratio of prices will it be impossible to find any trade that will make no consumer worse off. Any point that lies either on the production possibilities curve or to the left of it is said to be an attainable point : it can be produced with currently available resources. Points that lie to

1802-522: The demand of the resource increases and the supply stays the same. Supply-induced scarcity happens when a supply is very low in comparison to the demand. This happens mostly due to environmental degradation like deforestation and drought . Lastly, structural scarcity occurs when part of a population does not have equal access to resources due to political conflicts or location. This happens in Africa where desert countries do not have access to water . To get

1855-482: The economy's available quantities of factors of production do not change over time and that technological progress does not occur, if the economy is operating on the PPF, production of guns would need to be sacrificed to produce more butter. If production is efficient, the economy can choose between combinations (points) on the PPF: B if guns are of interest, C if more butter is needed, D if an equal mix of butter and guns

1908-603: The given resources are fully and efficiently utilized per unit time. A PPF illustrates several economic concepts, such as allocative efficiency , economies of scale , opportunity cost (or marginal rate of transformation), productive efficiency , and scarcity of resources (the fundamental economic problem that all societies face). This tradeoff is usually considered for an economy , but also applies to each individual, household, and economic organization. One good can only be produced by diverting resources from other goods, and so by producing less of them. Graphically bounding

1961-495: The goods that people want to consume". Economic scarcity as defined by Samuelson in Economics , a "canonical textbook" of mainstream economic thought "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good ... (outlined in the production possibility curve (PPC) )." If

2014-495: The higher the investment this year, the more the PPF would shift out in following years. Shifts of the curve can represent how technological progress that favors production possibilities of one good, say guns, more than the other shifts the PPF outwards more along the favored good's axis, "biasing" production possibilities in that direction. Similarly, if one good makes more use of say capital and if capital grows faster than other factors, growth possibilities might be biased in favor of

2067-415: The increase in the production of goods and services. Specifically, at all points on the frontier, the economy achieves productive efficiency : no more output of any good can be achieved from the given inputs without sacrificing output of some good. Some productive efficient points are Pareto efficient : impossible to find any trade that will make no consumer worse off. Pareto efficiency is achieved when

2120-651: The loss in gun production will be small. However, the cost of producing successive units of butter will increase as resources that are more and more specialized in gun production are moved into the butter industry. If opportunity costs are constant, a straight-line (linear) PPF is produced. This case reflects a situation where resources are not specialised and can be substituted for each other with no added cost. Products requiring similar resources (bread and pastry, for instance) will have an almost straight PPF and so almost constant opportunity costs. More specifically, with constant returns to scale, there are two opportunities for

2173-424: The marginal opportunity cost of butter in terms of guns. If, for example, the (absolute) slope at point BB in the diagram is equal to 2, to produce one more packet of butter, the production of 2 guns must be sacrificed. If at AA , the marginal opportunity cost of butter in terms of guns is equal to 0.25, the sacrifice of one gun could produce four packets of butter, and the opportunity cost of guns in terms of butter

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2226-543: The market or for other reasons. Temporary scarcity can be caused by (and cause) panic buying . A scarce good is a good that has more quantity demanded than quantity supplied at a price of $ 0. The term scarcity refers to the possible existence of conflict over the possession of a finite good. One can say that, for any scarce good, someone's ownership and control excludes someone else's control. Scarcity falls into three distinctive categories: demand-induced, supply-induced, and structural. Demand-induced scarcity happens when

2279-433: The opportunity cost of producing that product increases, because we are using more and more resources that are less efficient in producing it. With increasing production of butter, workers from the gun industry will move to it. At first, the least qualified (or most general) gun workers will be transferred into making more butter, and moving these workers has little impact on the opportunity cost of increasing butter production:

2332-402: The original per capita production level. In other words, humans had a propensity to utilize abundance for population growth rather than for maintaining a high standard of living, a view that has become known as the " Malthusian trap " or the "Malthusian spectre". Populations had a tendency to grow until the lower class suffered hardship, want and greater susceptibility to famine and disease ,

2385-536: The production possibilities available to a nation or economy during a given period of time for broad categories of output. It is traditionally used to show the movement between committing all funds to consumption on the y -axis versus investment on the x -axis. However, an economy may achieve productive efficiency without necessarily being allocatively efficient . Market failure (such as imperfect competition or externalities ) and some institutions of social decision-making (such as government and tradition) may lead to

2438-416: The production possibilities curve. At any such point, more of one good can be produced only by producing less of the other. For an extensive discussion of various types of efficiency measures ( Farrell , Hyperbolic, Directional, Cost, Revenue, Profit, Additive, etc.) and their relationships, see Sickles and Zelenyuk (2019, Chapter 3). The slope of the production–possibility frontier (PPF) at any given point

2491-404: The right of the production possibilities curve are said to be unattainable because they cannot be produced using currently available resources. Points that lie strictly to the left of the curve are said to be inefficient , because existing resources would allow for production of more of at least one good without sacrificing the production of any other good. An efficient point is one that lies on

2544-418: The sense in which the economist uses that term. Free goods are things which exist in superfluity; that is, in quantities sufficient not only to gratify but also to satisfy all the desires which may depend on them." As compared with the scarce goods, nonscarce goods are the ones where there can be no contest over its ownership. The fact that someone is using something does not prevent anyone else from using it. For

2597-464: The title Rarity . If an internal link led you here, you may wish to change the link to point directly to the intended article. Retrieved from " https://en.wikipedia.org/w/index.php?title=Rarity&oldid=1109785484 " Category : Disambiguation pages Hidden categories: Short description is different from Wikidata All article disambiguation pages All disambiguation pages Economic rarity "The best example

2650-399: The tradeoff between the goods. The sacrifice in the production of the second good is called the opportunity cost (because increasing production of the first good entails losing the opportunity to produce some amount of the second). Opportunity cost is measured in the number of units of the second good forgone for one or more units of the first good. In the context of a PPF, opportunity cost

2703-705: The water, they have to travel and make agreements with countries that have water resources. In some countries, political groups hold necessary resources hostage for concessions or money. Supply-induced and structural scarcity demands for resources cause the most conflict for a country. On the opposite side of the coin, there are nonscarce goods. These goods do not need to be valueless, and some can even be indispensable for one's existence. As Frank Fetter explains in his Economic Principles : "Some things, even such as are indispensable to existence, may yet, because of their abundance, fail to be objects of desire and of choice. Such things are called free goods . They have no value in

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2756-399: The wrong combination of goods being produced (hence the wrong mix of resources being allocated between producing the two goods) compared to what consumers would prefer, given what is feasible on the PPF. The two main determinants of the position of the PPF at any given time are the state of technology and management expertise (which are reflected in the available production functions ) and

2809-567: Was prominent member of the economics department at the London School of Economics . He is famous for the quote, "Humans want what they can't have." Robbins is noted as a free market economist, and for his definition of economics . The definition appears in the Essay by Robbins as: Robbins found that four conditions were necessary to support this definition: Therefore, the decision-maker must exercise choice, i.e., "economize." Robbins argues that

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