Scarcity and Rivalry Basics

Foundational concept in economics; pairs with rivalry to explain allocation of resources.
Everyday understanding: “not enough for everyone.”
- Limited or finite supply of the good or service.
- Exists alongside potentially unlimited human wants.
Formalized economic framing (verbal):
- A resource is scarce if demand at a zero (or very low) price would exceed supply.
- In symbols: \text{Scarcity} = (\text{Limited Resources}) + (\text{Unlimited Wants}).
Key implications
- Necessitates a mechanism (markets, queues, lotteries, government rules) to decide who gets what.
- Drives the study of opportunity cost, trade‐offs, pricing, and welfare.
Examples highlighted in the video
- Oil: finite global reserves; demand would skyrocket if free → classic scarce resource.
- Land & housing: limited square footage in desirable areas (e.g.
  San Francisco Bay Area) versus many people wanting to live there.
- Cake (only enough for four people in an office of 80–90) illustrates scarcity at a micro scale.

Intuitive link to the word “rival”: multiple parties contesting the same thing.
Formal definition: A good is rival if one person’s consumption diminishes the amount available to others.
- Logical statement: \forall i \neq j,\; \text{Use}i > 0 \; \Rightarrow \; \text{Availability}j < \text{Initial Availability}.
Consequences
- Generates competition; forces consideration of exclusion and property rights.
- Often paired with scarcity to create allocation problems (but goods can be rival yet not scarce, or scarce yet non‐rival in special cases).
Illustrated examples
- Housing: when a rental or house is taken by one family, it is no longer available to others → rival.
- Office cake: if one coworker eats a slice, there is less (or none) for everyone else.

Economists map goods along a continuum from highly rival to non‐rival.
- Visualized as a horizontal line:
- Left end: “Rival goods” (highly rivalrous).
- Right end: “Non-rival goods.”
Placement examples (from left toward right):
- Cake in the office (fully rival).
- Housing in a tight market (high‐rival, high‐scarcity).
- (Not yet discussed in this clip but implied) Broadcast television or digital files trend toward the non-rival end because one person’s viewing doesn’t limit another’s.
Importance of the spectrum
- Degree of rivalry affects optimal pricing, regulation, and public policy tools.
- Helps distinguish between private goods, common resources, club goods, and public goods (concepts to be analyzed in later lectures).

Scarcity + rivalry form the core problem of economics: how to allocate limited, competing resources.
Direct link to demand–supply analysis: Scarcity gives upward pressure on price; rivalry shapes how quantity allocations occur.
Ethical & policy dimension
- Who “deserves” scarce, rival goods? Market forces vs. fairness considerations.
- Real‐world tensions: rising rents in SF Bay Area, finite oil reserves vs. environmental concerns.
Foreshadowing
- Subsequent videos will “deep dive” into scarcity, opportunity costs, production possibilities, and how markets or governments resolve rival claims.