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

Detailed explanation-3: -If we take a good like oil. The reserves of oil are limited; there is a scarcity of the raw material. As we use up oil reserves, the supply of oil will start to fall. If there is a scarcity of a good the supply will be falling, and this causes the price to rise.

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: -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.