Scarcity

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Scarcity

Scarcity (/ˈskɛərsɪti/; from Latin scarcitas) refers to the basic economic problem, the gap between limited resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.

Definition

Scarcity, in the context of economics, is defined as a state of limited resources, where these resources are insufficient to meet all wants and needs. It is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.

Causes

Scarcity can occur when the demand for a certain resource exceeds its supply. This can be due to factors such as overpopulation, drought, crop failure, or natural disasters. Scarcity can also be a deliberate result of resource allocation by governments or businesses.

Effects

The effects of scarcity include resource depletion, increased costs, economic competition, and potential conflict over resources. It also forces individuals and societies to make certain economic choices and to prioritize different needs and wants.

Related Terms

External links

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