ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Resource scarcity occurs when demand for a natural resource is greater than the available supply – leading to a decline in the stock of available resources. This can lead to unsustainable growth and a rise in inequality as prices rise making the resource less affordable for those who are least well-off.

Detailed explanation-2: -It means that the demand for a good or service is greater than the availability of the good or service. Therefore, scarcity can limit the choices available to the consumers who ultimately make up the economy. Scarcity is important for understanding how goods and services are valued.

Detailed explanation-3: -Natural resources like gold, oil, silver and other fossil fuels are naturally rare. When demand exceeds the supply, these resources become scarce and prices can go up. Other commodities, like diamonds, command a high price because of their limited availability and control of their market.

Detailed explanation-4: -Demand-induced scarcity reflecting rising demand. Supply-induced scarcity caused by diminished supply. Structural scarcity attributable to mismanagement or inequality.

Detailed explanation-5: -Scarcity falls into three distinctive categories: demand-induced, supply-induced, and structural.