Q:

Why is scarcity an economic problem?

A:

Scarcity is one of 51 concepts identified by the National Council on Economic Education. Scarcity is an economic problem because one of the main factors that drives economics is the relationship in supply versus demand; if something is in demand and also in short supply, it is more scarce and therefore garners a higher price.

The field of economics looks at how purchasing decisions are made and what factors affect the choice to buy a given item. The principal of scarcity results from having unlimited wants in a world of restricted resources. The theory says that society has a limited means to produce, and therefore fulfill, all the desires and demands placed on a given market.

One simple example is produce shopping in a supermarket. When a fruit or vegetable is at its peak of production there is more of that food available and the price for it is lower than when that same item is purchased off season. When a food isn't in seasonal production, it becomes more scarce and then requires more resources to obtain than when it's plentiful.

The market availability of a demand, what it takes to produce or procure it, and the subsequent effect that has on prices are all factors in whether something is considered economically scarce.

Learn More

Related Questions

  • Q:

    How is solar energy used today?

    A:

    Solar energy is used in a number of ways, such as powering homes, businesses, cities and cars. Solar energy is gaining more popularity because people are becoming more and more aware of its advantages as the technology improves and the price of fossil fuels increases.

    Full Answer >
    Filed Under:
  • Q:

    What effect does cutting down trees have on soil quality?

    A:

    Soil becomes eroded, dry and polluted when trees are cut down. Trees filter pollution by keeping chemicals from reaching more of the soil. Tree roots hold soil when precipitation tries wash topsoil away, and trees draw moisture to the area so soil retains more water in drought conditions.

    Full Answer >
    Filed Under:
  • Q:

    Why is solar energy good?

    A:

    Solar energy offers many advantages, including lower electric bills, increased home value and a decreased carbon footprint. According to SolarWorld-USA, homeowners who install solar panels on their homes save an average of 50 percent off of their electric bills. Using solar energy is also environmentally friendly since it comes directly from the sun and does not produce any harmful waste products.

    Full Answer >
    Filed Under:
  • Q:

    How does renewable energy work?

    A:

    According to the Natural Resources Defense Council, renewable energy comes from either sources that cannot be depleted or from sources that can replenish themselves on a human time scale. The former category includes wind, solar, geothermal and hydroelectric power, and an example of the latter is biofuel.

    Full Answer >
    Filed Under:

Explore