Question

Which of the following BEST describes the main difference between scarcity and a shortage?
A.
While a shortage is a temporary market condition, scarcity is an ongoing condition in the world.
B.
While scarcity is a temporary market condition, a shortage is an ongoing condition in the world.
C.
Scarcity is found throughout the world, but shortages only occur in wealthy countries.
D.
Shortages occur everywhere, but scarcity happens only in countries with very high poverty levels.

Answer 1

Economics is the study of how to distribute scarce resources over our unlimited wants. Sacarcity has the meaning of finite amount or limited. Clean air is a good example. Since air can be cleaned at any one time there is only so much clean air. Another example, copper has been used as a metal for several thousand years but there is only so much copper. It can be reused and reused so that it is available but it is always limited given the potential uses uses for it. Copper is always scarce.

A shortage has to do with the relationship between the amount the supplier are willinh to supply and the given price in a specific time period. Therefore as prices go up, the suppliers will work to supply more of the product and as the prices go down the supplier will cut back the amount they are willing to supply. However if prices are fixed for some reason, say by the government, then the demand (what people want at that price) and the supply may not be equal. Therefore a shortage may occur.
However, if prices are allowed to move, as the price goes up, the suppliers increase the quantity supplied and the consumers reduce the quantity they are willing to buy. The shortage goes away over time. In very short time periods you still may have temporary shortages.

Hope I helped. :) And welcome to OpenStudy! :D

Answer 2

Looks useful indeed.