Exercises: Needs, goods, and scarcity

Explain in your own words what an economic need is and how it differs from a simple want. Give two examples of each related to your life as a student.

Classify the following goods as free or economic goods and justify each decision: the air you breathe in the countryside, a sandwich from the cafeteria, sunlight, a cinema ticket, bottled water, and the school's Wi-Fi.

The diagram summarises the basic economic problem, but one of the boxes is covered with a question mark. State which concept is missing and explain with one sentence what each step of the diagram means.

The school cafeteria bakes $200$ sandwiches a day and there are $500$ students who would like to buy one for $\$40$.

1. a) Is there a shortage of sandwiches at that price? Justify your answer using the data.
2. b) Propose two different ways of distributing the available sandwiches and explain the criterion used by each.

A family reviews its monthly expenses: rent, streaming platform, food, gym, medicines, and holidays. Classify each expense as a primary or secondary need and reason which ones could be cut with the least cost if their income fell.

Explain why we say that scarcity forces us to choose. Illustrate this with an example of your own where you have $\$400$ and a whole Saturday ahead of you: what options you consider, which one you choose, and what you give up.

In a village, spring water was always free and abundant. After several summers of drought, the local municipality rations it and charges for irrigation tanks.

1. a) Explain how the status of water as a good has changed.
2. b) Analyze what new economic relationships arise among the neighbors due to scarcity.

A technology company states in its advertising campaign: «Thanks to artificial intelligence and solar-powered data centers, the marginal cost of copying and distributing information is zero. Technology has finally defeated scarcity».

1. a) Refute this statement by analysing at least two productive resources essential for sustaining this digital economy (for example, critical minerals for processors, continuous electrical power, or human attention and time) that remain strictly scarce.
2. b) Using the distinction between absolute physical scarcity and relative economic scarcity, explain why an almost infinite abundance of information does not eliminate the economic problem, but rather shifts the opportunity cost to other links in the system.

In a university hall of residence, the dining hall is included in a fixed monthly fee (flat-rate full board). At the end of the term, it is found that $25.0\ \%$ of the food served is thrown directly into the bin.

1. a) Interpret this waste from the perspective of marginal cost for the resident: why does a good perceived as free at the point of consumption alter incentives and generate an inefficient allocation of scarce resources?
2. b) Management is considering two reforms:

• Measure 1: Reduce the fixed monthly fee and charge for each dish individually according to its actual cost.

• Measure 2: Charge a deposit of $2.00\text{ \$}$ when picking up the tray, refundable only if it is returned with no leftover food.

Predict the incentives and possible perverse effects of each measure, and justify which one you would choose to minimise waste with the lowest management cost.