ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -One of the defining features of economics is scarcity, which deals with how people satisfy unlimited wants and needs with limited resources. Scarcity affects the monetary value people place on goods and services and how governments and private firms decide to distribute resources.

Detailed explanation-2: -Key Difference Between Scarcity and Shortage Scarcity refers to the limited availability of a resource, while shortage refers to a temporary deficit of a resource in a specific market or location. In other words, scarcity is a fundamental aspect of the economy, while shortage is a temporary market condition.

Detailed explanation-3: -Resources are scarce because we live in a world in which humans’ wants are infinite but the land, labor, and capital required to satisfy those wants are limited. This conflict between society’s unlimited wants and our limited resources means choices must be made when deciding how to allocate scarce resources.

Detailed explanation-4: -Scarcity falls into three distinctive categories: demand-induced, supply-induced, and structural.

Detailed explanation-5: -The easiest way to distinguish between the two is that scarcity is a naturally occurring limitation on the resource that cannot be replenished. A shortage is a market condition of a particular good at a particular price. Over time, the good will be replenished and the shortage condition resolved.