ECONOMICS
SCARCITY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The cost increases.
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The cost stays the same.
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The cost goes down.
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The cost always doubles.
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Detailed explanation-1: -According to the scarcity principle, the price for a scarce good should rise until an equilibrium is reached between supply and demand.
Detailed explanation-2: -When raw materials become scarce, their prices increase, leading to higher supply costs. For example, T-shirts are always “scarce” products because their demand is limitless, while their supply may fall short.
Detailed explanation-3: -Scarcity is one of the key concepts of economics. 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.
Detailed explanation-4: -Commodities. 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-5: -A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.