Difference Between Scarcity and Shortage

Scarcity vs Shortage

There are times when a commodity is in paucity in a place. People are confused whether it is scarce or there is a shortage of the commodity. These are two words that are very confusing with both having similar meanings. Often people use them interchangeably which is incorrect s these words have different usages and are used in different contexts. This article will attempt to highlight these differences to help readers to choose the right word depending upon the context.

Shortages are manmade in the sense that producers or sellers are not willing to offer goods or services at current prices. These shortages vanish after a price hike. On the other hand scarcity refers to a situation when the commodity is actually in limited quantities that cannot meet the unlimited demands of the people. For example, land is something that becomes scarce with rise in population. If a farmer has four sons, he has to distribute his property dividing it into four parts and he cannot hope to give each son what he has.

A shortage is temporary in nature and can be overcome with a rise in price while scarcity always exists. Taking example of natural oil, we can say that it is getting scarce by the day as we are using up all the natural resources of oil. This scarcity will only exacerbate in future. The shortage in the supply of oil is temporary as when oil producing countries lessen the production as they cannot supply oil in requisite amounts to meet the demands of world population at current prices. As soon as oil prices are increased, this shortage is removed.

A shortage only implies that too little is available at current prices to meet the demands of the population. But scarcity cannot be removed. It will always exist. Even at zero prices, some good and services remain scarce. For example, you cannot hope to give art work of Picasso to everyone who wants it simply because it is scarce and not enough to be given freely. Sometimes, a crop fails in a country causing acute shortages. However, this shortfall in production can be met by importing that crop from other countries.