The Science of Demand (15) - Unofficial Translation of Steven Cheung's 经济解释 - 科学说需求

Section 2.  What is Scarcity?

“More is better than less” is the definition of economic good, as well as the definition of “scarcity”. That is, all economic goods are scarce, or inadequate. How come “inadequate”? If fresh sea breeze and bright moon among mountains are indeed “unprohibited to procure, inexhaustible to consume” per Su Dongpo, that is of course adequate. As such, breeze and the moon can only be free goods – though in the real world, fresh breeze and bright moon are so rare and valuable that they have long become economic goods. In a stricter sense, the so-called “inadequate” does not necessarily relate to quantity supplied. For instance, non-rotten eggs number more than rotten eggs, but non-rotten eggs are inadequate while rotten eggs are too many. Good eggs, subject to strong demand, are inadequate; whereas rotten eggs, shunned without any demand, are way too many.

If a good has no demand, there would not be such thing as “have is better than have-not” in the world. If supply is unlimited, “more is better than less” will then be out of the question. “Scarcity” is caused by limited supply when there is demand. When quantity demanded is increased, even with more supply (still limited though), people may still feel inadequate; with lower demand, limited supply may be considered adequate. That is, the degree of scarcity is determined by relative demand.

The supply of a scarce good – an economic good – cannot completely meet people’s demand. Consequently, such a good will become “more is better than less”. Since more is better than less, in order to get more, people will be willing to forgo a little option. Unwilling to forgo any option in order to get more of a good, the good cannot be said to be “more is better than less” – logic does not allow us to oppose to this view. Therefore, whenever someone is willing to forgo an option for more of a good, such a good is scarce, inadequate, and an economic good. In the market, the option we forgo is price. We can thus say that every good with a price is scarce and inadequate. In some societies – like certain extreme communist societies – market does not exist. There are no prices, but sacrifice is still needed. Hence we can also say that goods without prices can also be economic goods. As long as they are scarce – and since they are scarce (and since people would strive for more), sacrifice is inevitable.