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Allocating scarce resources

Hopefully, the previous discussion brought you to the conclusion that scarcity is all about the allocation of scarce resources – we don’t pay for air because it’s everywhere. In the film, it wasn’t everywhere, so by definition it was a scarce resource.

Scarcity in the economics sense has a slightly different meaning to what you might be used to. If something has a positive price tag, it is defined as scarce (Beveridge, 2013, p. 2).

Scarcity is fundamental to the point of economics as a whole: discovering and applying the mechanisms used for allocating scarce resources. Who gets a scarce resource, and how can scarce resources be allocated fairly? As scarce resources have a value greater than zero (a ‘positive price tag’), they can be allocated depending on who pays the most for them. One way of obtaining more scarce resources is buying more of them using another scarce resource – money – which means it involves a trade-off of value.

From this rationale, we can conclude that there are three main challenges in economics regarding scarcity:

  • What to produce?
  • How to produce?
  • How do we distribute production?

Logistics has a key role to play in answering these questions.

Your task

Explore methods for allocating scarce resources. Conduct some research for yourself, then post a summary in the comments area and compare your findings with your fellow learners.


Beveridge, T. (2013). A Primer on Microeconomics. Business Expert Press. https://locate.coventry.ac.uk/permalink/f/gr8698/COV_ALMA5183238700002011

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This article is from the free online course:

What is Economics in Global Logistics?

Coventry University