Economics Scarcity

In this essay I will discuss whether scarcity is the central problem in all societies irrespective of economic system. I will also look at each different economic system, and also whether other economic problems than scarcity need to be considered. Scarcity is the excess of human wants over what can actually be produced to fulfil these wants (Sloman and Wride 2009). This means that there are infinite demands with only finite resources.
The first economic system is the free market economy. In this system there is no intervention by the government whatsoever. Everything is determined by the firms and by the households in that economy. One feature of the free market economy would be the price mechanism. This is where price reacts to a surplus of goods, or to a shortage of goods caused by scarcity. If there is a shortage of goods, with no market intervention naturally producers and consumers will meet at a new equilibrium, and prices will increase as supply decreases. Alternatively if there is a surplus of goods, and again naturally with no market intervention, prices will decrease. A strong feature of free market economies would be that markets are highly competitive, therefore there is strong competition between firms, this keeps prices down and forces firms to be more efficient. Also having a government which measures and impacts on an economy constantly can be very costly, but this is not a cost felt by the free market economies. Furthermore, having a free market means that there are quick reactions to a change in price by the consumer or producer. A possible downside of the free market economy could be exploitation. This could include exploitation of workers or exploitation of consumers. This means either companies bounding together forcing workers to work for a lower wage, forcing consumers to pay more for goods as it is the only option they have. Unemployment however in this type of economic system is almost zero, as every worker finds a job at a wage they