econ 101

Everything is scarce. Some things are so abundant (like space to walk around) their scarcity is not typically relevant, but for many things their scarcity is very relevant and thus they come with a price tag.

The price of something captures the scarcity of it relative to the scarcity of money. Money has value because of its scarcity. The government controls how scarce money is using its monopoly on the supply of its brand of money. Relative prices between two things reflect the relative scarcity of those two things. 

If the number of people that want something exceeds the number of it available, then some people will be excluded from having it. In a market, the people who are least willing and able to pay do not get the thing. A universal or selective subsidy would not change the number of people who are excluded from getting the thing unless it also reduces the thing’s scarcity. At most, subsidies that don’t address scarcity can change who is excluded from the thing.

An alternative approach to allocating a scarce thing would be a lottery - making the exclusion random. A lottery is inefficient because the people who want the thing the most have the same probability of getting it as those who want it the least.

The more scarce something is the more the price of it will be bid up by those able and willing to pay the most for it. Willingness to pay correlates with how much a person thinks the thing will improve their life, which correlates with how much the thing will improve their life.

The less scarce something is the less the price needs to be bid up before the number of people willing and able to pay for it matches the number available.