Chapter 1, Problem 11AA

Solution

The manner in which scarcity is different from shortage.

Scarcity is defined as the problem in which there is limited resources available but unlimited wants. When there is fixed amount of resources available at any point of time and people have different kind of uses for those resources, this leads to the scarcity.

Scarcity is different from shortage. This is because when we talk about scarcity it refers to the unlimited wants of the people for the available resources, whereas shortage is temporary. They occur frequently. For example, when floods landslides occur, it leads to the shortage of goods and services and property.

Generally, scarcity occurs when available resources are rare and difficult to reproduce whereas shortage occurs when a good or service have high demand but due to less supply, it does not satisfy the demand. Scarcity is permanent whereas shortage is temporary.