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Chapter 1: Problem 5

According to Forbes magazine, in 2017 , Bill Gates was the world's richest person, with wealth of \(\$ 86\) billion. Does Bill Gates face scarcity? Does everyone? Are there any exceptions? Source: "The World's Billionaires," forbes.com, March 20, 2017 .

Short Answer

Expert verified
Yes, Bill Gates also faces scarcity as time, for example, is a limited resource that remains finite regardless of how much wealth a person has. Yes, everyone faces scarcity as available resources are always limited whereas wants are unlimited. No, there are no exceptions to scarcity. It is a universal concept applicable at all levels - individual, societal, and global.

Step by step solution

01

Understanding Scarcity

Scarcity, in economics, refers to the basic economic problem, the gap between limited resources and theoretically limitless wants. The term 'limited resources' here is not confined to money alone but it includes all finite resources like time, workforce, raw materials which a person or society has.
02

Understanding Application of Scarcity

Coming to Bill Gates, even though he has billions of dollars, he still faces scarcity because he can't buy more time, a finite resource that he, like everyone else, has only 24 hours of each day. His wealth doesn't exempt him from this basic economic problem. Moreover, wealth cannot satisfy every want as some wants are non-materialistic which can't be fulfilled by money.
03

Extending Scarcity Concept to Everyone

This inability to satisfy all wants due to limited resources applies to everyone, regardless of their wealth status. Even nations face scarcity because economic resources (land, labor, capital) are limited but wants are infinite.
04

Scarcity Exceptions

As per the widespread economic consensus, there are no exceptions to this rule. Scarcity is universal. It exists at all levels - individual, societal, and at a global level.

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Most popular questions from this chapter

In a paper written by Bentley College economists Patricia M. Flynn and Michael A. Quinn, the authors state: We find evidence that Economics is a good choice of major for those aspiring to become a CEO [chief executive officer]. When adjusting for the size of the pool of graduates, those with undergraduate degrees in Economics are shown to have had a greater likelihood of becoming an S\&P 500 CEO than any other major. A list of famous economics majors published by Marietta College includes business leaders Elon Musk, Warren Buffett, Steve Ballmer, David Rockefeller, Arnold Schwarzenegger, Bill Belichick, Diane von Furstenberg, and Sam Walton, as well as Presidents George H.W. Bush, Gerald Ford, Ronald Reagan, and Donald Trump, and Supreme Court Justice Sandra Day O'Connor. Why might studying economics be particularly good preparation for being the top manager of a corporation or a leader in government?

What is the difference between efficiency and equity? Why do government policymakers often face a trade-off between efficiency and equity?

Leonard Fleck, a philosophy professor at Michigan State University, has written: When it comes to health care in America, we have limited resources for unlimited health care needs. We want everything contemporary medical technology can offer that will improve the length or quality of our lives as we age. But as presently healthy taxpayers, we want costs controlled. Why is it necessary for all economic systems to limit services such as health care? How does a market system prevent people from getting as many goods and services as they want?

Why does scarcity imply that every society and every individual face trade- offs?

(Related to Solved Problem 1.1 on page 7 ) Late in the semester, a friend tells you, "I was going to drop my psychology course so I could concentrate on my other courses, but I had already put so much time into the course that I decided not to drop it." What do you think of your friend's reasoning? Would it make a difference to your answer if your friend has to pass the psychology course at some point to graduate? Briefly explain.
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