Answer to Question #224623 in Microeconomics for Adrew

Question

What scarcity ,how it occurs and how to identify scarcity ?

Answer 1

The difference between limited resources and theoretically limitless needs is referred to as scarcity in economics. People must make decisions on how to allocate resources efficiently in order to meet fundamental necessities and as many additional wants as possible in this situation. Any resource with a non-zero cost of consumption is rare in some way, but relative scarcity is what matters in practice. Scarcity arises as a result of society's inability to create all of the things that people desire. Scarcity has the effect of forcing us to make economic judgments about how to fulfill seemingly endless and competing needs while judiciously utilizing relatively scarce resources. Because of the scarcity of resources, we must select how and what to produce. It means that while making economic decisions, there is always an opportunity cost. One of the most fundamental challenges in economics is scarcity. Land — a scarcity of fertile land on which people can cultivate food.