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Economics - Financial Markets
OpenStudy (anonymous):

What is the difference between a shortage and scarcity?

OpenStudy (anonymous):

shortage may be made by us but scarcity means unavalability of resources in real terms

OpenStudy (anonymous):

I wrote that they have no real difference , and I think I got it right on my test , but I'd still double check .

OpenStudy (anonymous):

No there is a difference. Scarcity as mahariltaf said is the fact that no resources are in such abundance to mankind, that they are costless or at a zero price, therefore we most determine how to allocate these scarce resources in an economy. Shortage on the other hand is a function of the price of a product, the demand for the product, and the supply of the product. A shortage will exist whenever the PRICE is below the Equilibrium price that should exist in the market. Therefore more demand the product than Suppliers are willing or able to supply at that price. In a free market economy, this will never exist for long as the market price will move up automatically to the Equilibrium level though the actions and reactions of Individuals and the Suppliers. See graph.|dw:1338374108343:dw|

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