Hello, sorry I'm sure this is a dumb question
I'm having a hard time understanding scarcity on a microeconomic level
For example: with the current geopolitical conflicts going on, oil would be considered scarce since it's a natural resource, right? I'm not seeing how that's on a microeconomic level instead of macroeconomic
Another way I've tried to think of it is in the use of natural resources (minerals/things like copper products) for construction of data centers. But again, since those resources are used on a global scale how does that fit into the microeconomic view?
TIA
Is someone willing to help me understand scarcity?
byu/imthetrashman12 inAskEconomics
Posted by imthetrashman12
2 Comments
Micro and macro aren’t delineated by how global the market is. At a loose definition, macro is talking about “the economy” while micro can be talking about specific markets – for instance the market for oil, or household budgeting or anything in between. A discussion about how a supply shock in oil affects gdp growth or inflation, for instance is more of a macro economic view, while a discussion about a shock to the middle east and its impact on global oil prices is still in the realm of micro.
It’s easiest to understand in contrast to goods that are not scarce – so called free goods, where supply exceeds demand at a price of zero.
Scarce goods are the opposite – where demand exceeds supply at a price of zero. These are economic goods, which have a positive market clearing price. You can then analyze the behavior of the market for that good via supply and demand, for instance.