According to Survey of Economics, economics is “ the study of choices when there is scarcity”(Sullivan, Sheffrin & Perez, 2012). Scarcity is a concept that is very familiar to some cultures, but not others. Here in the United States we have a culture of not appreciating the resources we have. Economics looks closer at these resources and the choices that humans make to determine the future of these resources.
One scarcity problem that affects the economy as a whole is scarcity of clean, drinkable water. As the world population increases, the demand for water increases and therefore water supply decreases. As time goes on and population grows, this will become a bigger problem. In some countries, this is already a huge problem that government is trying to alleviate. Australia is the driest continent in the world with little access to fresh water. As population goes up and the rivers dry up, Australia is facing a water crisis. To alleviate this problem, Australian government started a water policy reform that restricts water usage (Pilz, 2010). There are fines and penalties given to those who do not follow the policy. Other countries, including the United States, may need to adapt a similar reform in the future.
Opportunity cost is an economic principle that governs water scarcity. There are many opportunities costs of having clean, drinkable water including labor in water treatment facilities, and time spent purifying, bottling and shipping clean drinkable water. These things are sacrificed in the process of ensuring that we have drinkable water. Another principle that governs water scarcity is the marginal principle. In order to treat water for consumption, the marginal benefit of the drinkable water must be greater than the marginal cost. In other words, the water must be sold at a price that is above the price it cost to purify and…