2) Limited capabilities of technology or human skill (for example, those needed for enhanced production.) 3) Sometimes the insufficiencies are a result of poor planning and execution(Artificial scarcity).e.g.
In arid areas, proper planning is required for proper supply of water.
4) But the most important factor is imbalance b/w ‘Wants’ &’Have’. According to Emerson: “ Want is a growing giant whom the coat of Have is never large enough to cover.” Every person needs more resources than he have. e.g.
A millionaire wants more money so that he can be counted as Billionaire
Is it Possible to Have no Scarcity?
If proper planning & techniques are used for utilization and supply of insufficient resource, then condition of its to be scarce ‘minimizes’.
When making decisions about what to produce or what to consume, there is inevitably an opportunity cost. E.g.
GDP of country can be used for many purposes. However, option having highest opportunity cost will be favored.
2)How to produce?
Use of best possible technique & planning for production of a particular resource will result in better & huge production, hence minimizing the chance of Scarcity. E.g.
Before, the introduction of Green Revolution in India, there was Scarcity of Food grains. But with the introduction of High Yielding varieties of seeds & better technique for production, production of Food grains almost doubled.
Impact of Scarcity on Market?
If something is scarce - it will have a market value.
If the supply of a good or service is low, the market price will rise, providing there is sufficient demand from consumers. Whereas when there is excess supply in a market, we expect to see prices falling. For example,