DOES Scarcity Really Exist PDF

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Republic of the PhilppinesBATANGAS STATE UNIVERSITYCOLLEGE OF ACCOUNTANCY BUSINESS, ECONOMICS ANDINTERNATIONAL HOSPITALITY MANAGEMENTBUSINESS AND ENTREPRENUERSHIP DEPARTMENTCITE Building, Pablo Borbon Main 1, Rizal Avenue, Batangas CityA Position PaperPresented to the Faculty ofCollege of Accountanc...

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Republic of the Philppines

BATANGAS STATE UNIVERSITY COLLEGE OF ACCOUNTANCY BUSINESS, ECONOMICS AND INTERNATIONAL HOSPITALITY MANAGEMENT BUSINESS AND ENTREPRENUERSHIP DEPARTMENT CITE Building, Pablo Borbon Main 1, Rizal Avenue, Batangas City

A Position Paper Presented to the Faculty of College of Accountancy, Business, Economics and International Hospitality Management Batangas State University Topic: Does Scarcity really exist? In Partial Fulfillment of the Requirements for the Degree BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION (FINMGT 1103) Presented By: 1. Leader: Mark Vincent M. Magahis 2. Member: Francyn Sigrid A. Macalalad 3. Member: Alhexis C. Magadia Presented to: Asst. Professor INESIO H. SADIANGCOLOR November 2020

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TABLE OF CONTENTS Executive Summary ....................................................................................................................3-4 Introduction................................................................................................................................. 4-5 Issues and Research and Questions........................................................................................... 5-6 Methods Considerations.................................................................................................................7 Theory and Analytic Framework.............................................................................................8-10 Analysis.....................................................................................................................................10-12 Conclusion................................................................................................................................ 12-13 Recommendations....................................................................................................................14-15 References/Sources........................................................................................................................16 Appendices.....................................................................................................................................17

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I. EXECUTIVE SUMMARY Scarcity becomes the central issue worldwide and it captures the attention of normal people. Because Scarcity does not choose who will be affected by scarce resources we are all affected by this economic problem. It brought catastrophic consequences to society. Throughout history this has certainly been the case for economists across multiple disciplines, adding to previous discussions of how natural resources affect economic growth and, to a lesser extent, how economic growth impacts natural resource availability. Economics is the science of scarce resources and how to use them efficiently (or, in the jargon, how to optimally achieve an objective at the lowest cost possible). As such, scarcity is a concept as old as economics perhaps older. Scarcity was at the center of the widely known arguments popularized by Malthus’s 1798 Essay on the Principle of Population. He argued that populations tend to grow geometrically, while food production grows arithmetically, resulting in increasing population pressures on resources, leading often to catastrophic consequences. All of these views are rooted in the concept of scarcity of natural resources as a fundamental physical phenomenon. As physical resources become scarce, additional human workforce and capital will produce progressively lower outputs. This is the law of diminishing returns, which explains the concept of “marginal value.” Scarcity is also the reason why there are civil wars because of the unavailability of natural resources in different nations. Due to limited Natural resources, it does not only generate grievances and mobilize resources internally but also across nations. Civil wars associated with scarce resources have indeed been driven by all sorts of limited commodities in the past. That’s why in this Position Paper the researchers had discussed the issues about Scarcity, the researchers were able to generate questions to answer the main problem and relate some theory and conceptual framework to have a further discussion regarding this matter. The Analysis of Data was also provided in this paper to form a conclusion in the overall discussion and to give recommendations for those individuals or organizations who are concerned about this issue. The main topic of this paper is all about scarcity and the question Does Scarcity really exist? Wants to seek an answer from the researchers. To give a glimpse about scarcity an Introduction was made by the researchers for the readers to

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understand the context of scarcity. Related Literature was also included to support the claims and opinions of different authors regarding this issue.

II. INTRODUCTION Up-to-date life is full of commitments, demands, decision making, and choices. It is also about how consumers are faced with the decisions they have to make. Everyone tends to push their selves up to their limits. People experience scarcity as a part of the never-ending issue to solve in the field of economics. Scarcity is truly an inevitable problem to deal with, it became the central economic problem in the whole world even economic researchers cannot stop this problem. The concept of scarcity is central to a great deal of Economics and to most of the problems and challenges that economists are asked to deal with. Scarcity simply refers to the fact that we have limited or ‘scarce’ resources. Any individual country has, for example, a limited amount of farmland and a limited amount of oil. Even when we might have very large natural stocks of something, there may be only a rather limited amount that we can make available in any one year. For example, even if a country has huge supplies of coal enough to last for many thousands of years they can still only extract a limited amount from the ground in any one year. At any one time, a country also has a limited supply of workers. Most goods and products require raw materials and workers to make them and with a limited supply of raw materials and workers, we are also limited in terms of almost all the other goods we can produce, so those goods are scarce too! They might have listed such things as water and air as ‘free resources’ or ‘free goods.’ In many places in the world, however, water is quite scarce. And the air isn’t as free and as clean, smog-free air is not freely available to many of the inhabitants of some of the world’s largest cities. So, almost all resources are ‘scarce resources of which we have a limited supply. The key point about scarcity is that, since we are limited in the resources and goods available to us, we have to make choices about what we are going to use our scarce resources for. We have to choose and many of the decisions we have to make are difficult ones with profound and often fatal consequences.

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That's why we should know how to make choices under the condition of scarce just like everyday decisions, it can have a life-changing and deadly consequences for us. A simple decision to have a cup of coffee is in effect a decision that scarce, fertile farmland in a poor country will be used to grow coffee beans for you instead of growing food to feed the local population or some other poor people around the world. There are billions of important decisions that have to be made every day and Economics is largely about looking at the choices we face as individuals, businesses, nations, and as a species and helping us decide which options are the best ones to take. It is a tool for helping us make decisions. It helps us decide how to allocate and use our scarce resources to achieve many of the things we consider are worthwhile in life. Despite our scarce resources, we have a great many needs and wants. There are certain basic needs that we must fulfill in order simply to survive. We need water, food, shelter, and many more just to survive.

III. ISSUES AND RESEARCH QUESTIONS If scarcity doesn't exist in any aspect of society, without scarcity then a person does not need to make choices and decision making since he/she can have everything he/she wants. That's not what we want because it has a really big effect, especially on our nature. People might abuse the source of resources and our natural resources will be in big trouble. With the presence of Scarcity Humanity needed to make decisions in choosing how to maximize the use of scarce resources to satisfy as many wants as possible. If resources were unlimited and freely available, making choices would not be necessary. Every person could have as much as they wanted of any good or service. Economics, the science of choice, would be unnecessary and it would be left behind. The main point here is supply is limited because resources are limited. While Demand is practically unlimited that's the reason why scarcity is inevitable because it is in the nature of the human being to have unlimited wants and needs. We all know that scarcity does really exist the question now is we as people or society as a whole. How we will respond to these prevailing issues in order for humanity to survive. It is a fact that we cannot eliminate scarcity because of our unlimited wants even the United States of America. Considering they are one of the richest

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countries in the world they are still faced with scarcity. The goal here is to make choices that reduce scarcity as much as we can because scarcity can be reduced with the right choice and decision making. To make the right choices is to reduce scarcity and to increase the standard of living for their citizens with the help of the Government. With the presence of scarcity, we don't just make the right choice but we must consider getting the maximum satisfaction possible out of our limited resources. We should make the best choice out of it. Like what is happening right now because of COVID-19 Philippine's economic growth rate is slightly decreasing because of the implementation of enhanced community quarantine issued by the Government. This unprecedented and extraordinary public health emergency brought about by the COVID-19 pandemic will substantially slow down economic growth this year. It boils down to the issue of the capability of the economy to produce goods and services. Because of the limited resources to produce a good we could really feel and experience the effect of scarcity in our lives. The effective allocation of resources is a significant aspect of economics. The limited nature of resources relative to the unlimited bounds of human needs and wants makes the study of scarcity an integral part of economics. This study aims to determine the issues and questions about Does Scarcity Really Exist? The paper sought to know the views and perceptions of the underlying issues about scarcity and to answer the never-ending issues brought in the human race. Specifically, the paper aims to answer the following: 1. What are the possible effect of scarcity on the cognitive development of the people particularly in decision making? 2.Why is scarcity a fundamental aspect of economics? 3.What are some of the most important theories regarding scarcity? 3.1 Commodity Theory 3.2 Reactance Theory 4. What is the key role of scarcity as a preceding issue in society?

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IV. METHOD CONSIDERATIONS The study made use of a descriptive qualitative research method. It is defined as a type of social science research that collects and works with non-numerical data and that seeks to interpret meaning from these data that help people to understand social life through the utilization of different literature reviews and related study. The researchers concluded to utilize and focus on the qualitative point of view to the underlying concepts, principles, and theories. The purpose of this section is to present the underlying principles of research methodology and the choice of the appropriate research method for the study. Qualitative research collects data qualitatively, and the method of analysis to support the study. According to Denzin and Lincoln (1994), qualitative research is multi-method in focus, involving an interpretive, naturalistic approach to its subject matter. This means that qualitative researchers study things in their natural settings, attempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them. According to Gall, Gall, & Borg (2007), the goal of descriptive research is to describe a phenomenon and its characteristics. This research is more concerned with what rather than how or why something has happened. Therefore, observation and survey tools are often used to gather data. In such research, the data may be collected qualitatively, but it is often analyzed quantitatively, using frequencies, percentages, averages, or other statistical analyses to determine relationships. The purpose of using a descriptive method is to describe the study and explore the cause of scarcity as an occurring economic problem in society. The researchers use this kind of research to present the data from the gathered theories and related literature based on the given topic to formulate rational conclusions and recommendations of the study. This starts by providing an introduction about Scarcity and its existence. Followed by formulating issues and questions that are connected in the topic: Does Scarcity really exists.

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V. THEORY AND ANALYTIC FRAMEWORK Scarcity was at the center of the widely known arguments popularized by Malthus’s 1798 Essay on the Principle of Population. He argued that populations tend to grow geometrically, while food production grows arithmetically, resulting in increasing population pressures on resources, leading often to catastrophic consequences. Commodity theory (Brock, 1968) deals with the psychological effects of scarcity. According to the theory, scarcity enhances the value (or desirability) of anything that can be possessed, is useful to its possessor, and is transferable from one person to another. Scarcity is a pervasive aspect of human life and is a fundamental precondition of economic behavior. Commodity theory (Brock, 1968) deals with the psychological effects of scarcity. Its principle claim is that "any commodity will be valued to the extent that it is unavailable" (p. 246). However, a complete understanding of this principle requires an extended definition of three of its concepts i.e., commodity, value, and unavailability."Commodities" are any things messages, experiences, or objects that meet three criteria. First, commodities must be useful. Something is a commodity to a person only if it has some utility to him or her. Second, commodities must be transferable from one person to another. Things that cannot be given to, or taken from, others are not commodities as defined by the theory. Finally, commodities must have the potential to be possessed. Things that are beyond the reach of a person are not commodities for him or her."Value" refers to a commodity's "potency for affecting attitudes and behavior" (Brock, 1968, p.246). Since commodities have a positive utility, any enhancement of a commodity's value (or potency), will increase its perceived utility and will make the commodity more desirable and sought after. Thus, the term "value" can be equated with "utility" or "desirability." Marketers are interested in making their products and services more desirable and sought after, so commodity theory's predictions about scarcity effects on value have some relevance to their goals. Commodity theory argues that individuals evaluate products more attractive when it is scarce rather than abundant. Through the lens of commodity theory, much research has tested the following four relationships: a product will be more attractive (1) when the number of suppliers is small, (2) when a restriction on availability is imposed by the seller, (3) when a consumer has to wait to

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attain the product, and (4)when the consumer has to make an extra effort to obtain the product (Bozzolo and Brock1992; Brock 1968; Brock and Mazzocco 2003; Lynn and Harris 1997). Scarcity affects our thinking and feeling. Scarcity orients the mind automatically and powerfully toward unfulfilled needs. On the positive side, scarcity prioritizes our choices and it can make us more effective. Scarcity creates a powerful goal in dealing with pressing needs and ignoring other goals. Scarcity forces trade-off thinking. We recognize that having one thing means not having something else. But on the other side the context of scarcity makes you myopic (exhibiting bias toward here and now). The mind is focused on present scarcity. We overvalue immediate benefits at the expense of future ones (e.g., procrastinate important things, such as medical checkups, or exercising). We only attend to urgent things and fail to make small investments even when future benefits can be substantial. To attend to the future requires cognitive resources, which scarcity depletes. We need cognitive resources to plan and to resist present temptations. A key concern in the management of scarcity is to economize cognitive resources. The cognitive resource is about allocating our limited information-processing abilities. Reactance theory defines as when individuals’ existing freedom of choice is threatened, they will experience psychological reactance (Brehm, 1966). According to the reactance theory, if an individual’s freedom is threatened or eliminated, he/she experiences psychological reactance, which is a motivational state directed toward safeguarding a person’s behavioral freedom (Brehm 1966; Clee and Wicklund 1980; Wicklund 1974). This motivation leads to an intensified desire to accomplish the restricted behavior and simultaneously increases its perceived attractiveness (Brehm and Brehm 1981). Hence, a product’s limited availability or perceived scarcity can connote a threat or loss of personal freedom and therefore, may trigger psychological reactance that leads to increased attention, attraction to the unavailable good, and ultimately, increased consumer motivation to obtain the alternative that is no longer accessible (Ditto and Jemmott 1989; Markus and Schwartz 2010; Worchel and Brehm 1971). Scarcity has captured the mindset of people trapped in it. The ability to make decisions comes with a limited capacity. The scarcity state depletes this finite capacity of decision-making. Lack of time or the money scarce, either of the two produces anxiety that ends in a poor decision. The scarcity of time leads

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to procrastination, wherein people tend to do things which are pressing more demand on them at the priority while holding up to do things which may become worse due to delay. The scarcity of money affects the decision to spend that money on urgent needs while ignoring the other important things which come with a burden of future cost.

Table 1: Three Conceptual Framings

VI. ANALYSIS With the presence of scarcity, we cannot have everything we want. Insufficiency of resources to meet the needs and wants of the consumers and insufficiency of resources for producers that hamper enough production of goods and services. There are two concepts of scarcity first is relative scarcity it occurs not because the good is scarce and is difficult to obtain but because of the circumstances that surround the availability of the goods. Another one is absolute scarcity wherein the supply is very limited because of the location it explains why some products are very expensive in the Philippines. Besides unavailability, three conditions of scarcity are described in the literature; restricted availability, limited availability, and conditional availability (Verhallen and Robben, 1995). These conditions elicit different types of reactions, which can be seen in table no. 2.

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Table 2: Conditions of Product Availability Table no. 2 organizes the theoretical views presented above. The rows identify situations of unavailability, the columns represent analytical elements to explain the effect of unavailability. Tab...