Question

What is scarcity? Can you think of two causes of scarcity?

Answer 1

• Scarcity is the shortage in supply of resources. When the demand for a product is higher than its supply, then scarcity occurs. Most of the times, scarcity occurs due to humans inherent nature of limitless wants and available limited resources. When the available resources are not enough to satisfy the needs, then the problem of scarcity occurs. Scarcity can also happen when there is too little money to make a purchase. There are many other factors which leads to scarcity.
• Two main causes of scarcity is demand and supply. The changes made in these two factors can lead to scarcity of an item. When the demand for a product rises unpredictably, then there will not be enough products readily available to face the situation. In such cases, scarcity can happen.
• Another situation is when the supply is challenged by any of the causes such as natural calamities, producer shut downs an enterprise, etc., then the demand for that product will increase and there won't be enough products to satisfy the demand. Then also scarcity occurs.