12 Scarcity Examples (Scenarios and Consequences)

scarcity examples and definition, explained below

Scarcity refers to the limited availability of resources to meet unlimited wants and needs. It is a central concept in economics, explaining the situation where resources are significantly below demand (Turner, 2019).

Because resources (such as food, water, and produce) are limited and sometimes cannot meet all the wants and needs of individuals and societies, choices must be made about how to allocate them.

The concept of scarcity underscores the need for prioritization, allocation, and trade-offs in any economic system. In essence, scarcity forces individuals, firms, and governments to decide on the most efficient way to distribute and utilize their resources (Cannon, Goldsmith & Roux, 2019).

Scarcity Examples

1. Water Scarcity in Arid Regions

Scenario: In a particular desert town, there’s a limited amount of freshwater available due to decreased rainfall over the years. The town’s population, however, has been growing, leading to an increased demand for water for drinking, agriculture, and industry.

Impact: Residents might face water rationing, farmers might have to reduce or switch crops, and industries may have to cut back operations or invest in water-saving technologies.

2. Shortage of a Popular Toy during the Holiday Season

Scenario: A newly launched toy becomes a massive hit during the holiday season. The manufacturer did not anticipate the high demand, and as a result, there aren’t enough toys to meet consumer requests.

Impact: Prices for the toy on secondary markets (like online auction sites) might skyrocket. Parents and gift-givers might have to choose alternative gifts or wait for the next batch of toys to be produced after the holidays.

3. Limited Time for a Student Before Exams

Scenario: A student has three major exams on the same day. She has only a few days to prepare, but the total content to review for all subjects is vast.

Impact: The student must prioritize which subjects to focus on more intensively, perhaps based on which exams she feels least prepared for or which ones are worth the most toward her final grade. This may mean spending less time on a subject she’s more comfortable with to ensure she doesn’t fail another.

4. Limited Seats for a Popular Concert

Scenario: A world-renowned musician announces a one-night-only concert in a city, and tickets are limited due to the venue’s capacity. Demand for tickets far outstrips the number of seats available.

Impact: Ticket prices may surge on resale platforms. Fans might have to decide between paying a premium to attend, watching a live stream (if available), or missing out entirely. Some fans may camp out or log on early to secure tickets during the initial sale.

5. Shortage of Medical Supplies during a Health Crisis

Scenario: A sudden outbreak of a contagious disease leads to a skyrocketing demand for specific medical supplies, like masks and ventilators, but suppliers cannot produce and distribute them quickly enough to meet global needs.

Impact: Hospitals and clinics might have to prioritize which patients receive certain treatments. Governments might intervene to ration supplies, increase production, or source from alternative providers. Individuals may resort to DIY solutions or reuse supplies, potentially compromising safety.

6. Rising Demand for Urban Housing

Scenario: A booming city sees rapid job growth in its tech sector, attracting thousands of new residents. However, housing construction hasn’t kept pace with this influx, leading to a shortage of available homes and apartments.

Impact: Rent and home prices may soar, making it unaffordable for many residents, especially those in lower-income brackets. Some people might have to live farther from the city and face longer commutes, while others may share accommodations or live in substandard housing.

7. Limited Food Supply in a Drought-Affected Region

Scenario: A prolonged drought affects the agricultural output of a region, leading to a diminished harvest of staple crops.

Impact: Prices of staple foods might rise sharply due to decreased supply. Families might need to reduce their consumption, switch to alternative (and possibly less nutritious) foods, or rely on aid. Governments or NGOs might step in with food assistance programs or imports to alleviate the crisis.

8. Scarcity of Skilled Workers in a Specialized Field

Scenario: An emerging technology sector requires a specific set of skills that the current workforce lacks. As companies grow and try to expand, they find there aren’t enough qualified individuals to fill these roles.

Impact: Companies might offer higher salaries and benefits to attract the limited pool of skilled workers, potentially leading to wage inflation in that sector. They might also invest in training programs or look to hire from overseas. Individuals in related fields might see this as an opportunity for career advancement and seek additional education or training.

9. Shortage of Essential Medicines

Scenario: Due to supply chain disruptions, a particular essential medicine becomes scarce, with pharmacies and hospitals unable to restock in time.

Impact: Patients reliant on this medicine might face health risks or deteriorating conditions. Doctors may need to prescribe alternative treatments, which might be less effective or have more side effects. There might be a surge in black-market sales, with potential risks of counterfeit or substandard drugs.

10. Diminishing Natural Resources in a Mining Town

Scenario: A town built around a mine discovers that the mineral they’ve been extracting is nearing depletion, with only a few years of profitable extraction left.

Impact: The town might see a decline in jobs and local economy, leading to increased unemployment. Residents might need to find alternative sources of income, move to other areas for work, or undergo training for different sectors. The local government might promote tourism or other industries to offset the economic downturn.

11. Overfishing in Coastal Waters

Scenario: A coastal community heavily reliant on fishing finds that the local fish population has drastically decreased due to overfishing and environmental factors.

Impact: Fishermen might catch fewer fish, leading to reduced income. Prices of local fish in markets might rise, and consumers might switch to alternative protein sources. The community or governing bodies might implement fishing restrictions or promote sustainable fishing practices to allow fish populations to recover.

12. Limited Availability of Rare Books

Scenario: A rare, out-of-print book becomes highly sought after by collectors and scholars, but there are only a few known copies in existence.

Impact: The price of available copies might skyrocket in auction houses or collectors’ markets. Libraries holding the book might see increased requests for viewing or loaning. Digital reproductions or reprints might be produced to meet demand, though they might not have the same value or appeal as the original.

Implications of Scarcity

Scarcity, as a fundamental economic problem, has profound effects on individuals, societies, and economies.

The consequences of scarcity permeate many aspects of life and decision-making. Here’s a summary of 10 common implications of scarcity.

Resource PrioritizationScarcity forces individuals, businesses, and governments to decide how to distribute limited resources to satisfy unlimited wants (Cannon, Goldsmith & Roux, 2019). This often means making hard choices about what to prioritize and what to forgo.
Opportunity CostEvery choice made in the face of scarcity comes with an opportunity cost, which is the value of the next best alternative foregone (Hoag & Hoag, 2006). For example, if a country decides to invest more in military defense than in education, the opportunity cost might be a less educated workforce in the future.
Price FluctuationsIn a market economy, scarcity can lead to price increases (Blatt, 2014). As a resource becomes scarcer, its price tends to rise, which can then decrease demand or incentivize producers to supply more of it or find alternatives.
Increased CompetitionWhen resources are scarce, competition for those resources increases (Roux, Goldsmith & Bonezzi, 2015). For example, if there is job scarcity, potential employees will have to compete against a large pool of well-qualified candidates, who will likely accept lower pay than if the supply of jobs outstripped the demand for work.
Innovation and Technological AdvancementScarcity often drives innovation. As resources dwindle or become more expensive, individuals and businesses look for new methods, technologies, or substitutes that are more efficient or abundant (Srinivas & Sutz, 2006). For example, the scarcity of fossil fuels has spurred research into renewable energy sources.
Increased International TradeCountries might not have all the resources they need or might have them in abundance but lack others. Scarcity drives international trade as countries export what they have in abundance and import what they lack.
Short-Term FocusWhen faced with acute scarcity, there might be a shift to short-term thinking, as immediate needs take precedence over long-term sustainability. This is particularly harmful to the poor, whose experience of scarcity means they need to spend in the present instead of investing in the future (De Bruijn & Antonides, 2022).
Environmental DegradationDesperation to utilize scarce resources can sometimes lead to environmental harm. Overfishing, deforestation, and aggressive mining are examples where the need to address immediate scarcity can lead to long-term environmental consequences (Krautkraemer, 2012).

How the Market Addresses Scarcity

An open market economy employs several mechanisms to address and manage scarcity.

1. The Reaction of Producers

One way the market reacts is through demand and supply interactions. In a free market, prices are determined by the interplay of demand and supply. When a good is scarce relative to its demand, its price tends to rise (Kates, 2017; Turner, 2019). This higher price can reduce demand and incentivize suppliers to produce more or find alternative sources.

The increased price due to scarcity also acts as a rationing mechanism. As the price of a scarce resource rises, only those who are willing and able to pay the price will consume it.

Higher prices resulting from scarcity may also provide an incentive for producers to increase the supply of the scarce good or service (Kates, 2017). This could involve ramping up production, finding more efficient production methods, or sourcing additional raw materials.

Scarcity may also drive the market to innovate. (Srinivas & Sutz, 2006) Producers, in the face of rising costs for a scarce input, might look for alternative materials or technologies. For example, the increasing scarcity and price of fossil fuels have accelerated research and development in renewable energy technologies.

2. The Reaction of Consumers

As prices rise due to scarcity, consumers might reduce their consumption or use resources more efficiently (Kates, 2017). For instance, water scarcity and subsequent higher prices can encourage households and industries to reduce wastage. Similarly, energy scarcity may increase prices, causing consumers to turn down the heat in their homes.

Similarly, if a particular good becomes too scarce and its price rises significantly, consumers might turn to substitute goods (Hahnel, 2022) that can serve a similar purpose but are more readily available or cheaper. This switch can alleviate demand pressures on the scarce good.

Thirdly, anticipating future scarcity, consumers might stockpile certain goods (Keck, 2017). Hoarding behaviors, such as the common behavior of stockpiling toilet paper during supply failures, tend to exacerbate scarcity in the short-term, and can even have a self-fulfilling prophecy effect.


While the market has its ways of dealing with scarcity, it’s not always perfect or equitable. There are scenarios where market outcomes might need to be supplemented or corrected with policy measures to ensure fairness, sustainability, and long-term societal well-being.


Blatt, D. (2014). Understanding the Economic Basics and Modern Capitalism: Market Mechanisms and Administered Alternatives. iUniverse.

Cannon, C., Goldsmith, K., & Roux, C. (2019). A self‐regulatory model of resource scarcity. Journal of Consumer Psychology29(1), 104-127. (Source)

De Bruijn, E. J., & Antonides, G. (2022). Poverty and economic decision making: a review of scarcity theory. Theory and Decision92(1), 5-37. (Source)

Hahnel, R. (2022). A Participatory Economy. AK Press.

Hoag, A. J., & Hoag, J. H. (2006). Introductory Economics. World Scientific.

Kates, S. (2017). Free Market Economics, Third Edition: An Introduction for the General Reader. Edward Elgar Publishing.

Keck, F. (2017). Stockpiling as a technique of preparedness: Conserving the past for an unpredictable future. Cryopolitics: Frozen life in a melting world, 117-142.

Krautkraemer, J. A. (2012). Economics of scarcity. Scarcity and Growth Revisited: Natural Resources and the Environment in the New Millenium, 54.

Roux, C., Goldsmith, K., & Bonezzi, A. (2015). On the psychology of scarcity: When reminders of resource scarcity promote selfish (and generous) behavior. Journal of consumer research42(4), 615-631. (Source)

Srinivas, S., & Sutz, J. (2006). Economic development and innovation: problem-solving in scarcity conditions. CID Graduate Student and Postdoctoral Fellow Working Paper Series. (Source)

Turner, J.R. (2019). Introduction to Economics. Taylor & Francis.

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Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education. [Image Descriptor: Photo of Chris]

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