for a commodity may be said to grow scarcer when it becomes more difficult and expensive to collect a certain quantity of it
-- Adam Smith
Furthermore, as materials grow scarce, the price rises and it becomes more economic to mine marginal reserves. Not only that, it becomes cheaper in some cases to use or develop substitutes. As supplies appear to dwindle, so does the rate of use. Instead of the world suddenly waking up one morning to find the last ounce of aluminium gone, it turns gradually to glass filaments and to carbon fibre as substitutes. New methods of extraction and reclamation become economically viable. The question is whether our development of new sources and substitutes is faster than our use of resources.
-- Masden Pirie
“One thing that always puzzled economists was why water – so essential to life – was so cheap, while diamonds – so inessential – were so expensive. Menger provided the answer. Individuals never have the options of owning all the world’s water, or all the world’s diamonds. They face only the options of having some small amount of each – say, a cupful of water, or a single diamond. Most people already have enough water to slake their thirst, and so do not value an extra cupful of it very much. But few people ever believe they have enough diamonds, so are prepared to pay handsomely for another. They do not think they will get much benefit from an extra cup of water, but they imagine great benefit from owning an additional diamond. It is a question of what is called marginal utility – how much benefit people expect to get from a small addition to their existing stocks of things.”
-- Dr Eamonn Butler
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