Question

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

Short answer

Scarcity refers to the fundamental economic problem of having limited resources to meet unlimited human wants and needs. Two causes of scarcity are limited resources, such as land, water, oil, minerals, and human labor, and population growth, which increases the demand for resources to satisfy the needs of an ever-larger population.

Step-by-step solution

Define scarcity

Scarcity refers to the fundamental economic problem of having limited resources to meet unlimited human wants and needs. In other words, there are not enough resources available to provide everything that everyone wants and needs, leading to the need for choices and priorities.

Cause of scarcity: Limited resources

One cause of scarcity is the limited availability of resources. Resources can be either natural or man-made, such as land, water, oil, minerals, and human labor. These resources are finite and cannot be replenished once they are used up, which makes them scarce in relation to the ever-growing human wants and needs.

Cause of scarcity: Population growth

Another cause of scarcity is population growth. As the number of people in the world increases, so does the demand for resources to satisfy the needs of an ever-larger population. With more people to feed, house, and provide for, there is a greater strain on the already limited resources, leading to increased scarcity.