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Chapter 1: 1 (page 24)

What is scarcity? Can you think of two causes of scarcity?

Short Answer

Expert verified

Scarcity is an economic problem, basically a gap between human's endless wants and limited resources available.

The two reasons for scarcity are:

1. Limited resources

2. Limitless wants

Step by step solution

01

Scarcity

One of the most important notions in economics is scarcity. It signifies that the demand for a product or service exceeds the supply of that product or service.

02

Two reasons for Scarcity

1. Limited resources - The resources such as raw materials, land, tool, labor, etc., are required for productions but are available in limited resources.

2. Limitless wants - Human wants are infinite and can never be fulfilled. It is natural that human beings desire more and more which results in scarcity.

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