What are the applications of the law of scarcity?

Economics Dec 10, 2020

Expert Solution

The laws of scarcity have different applications and two main applications are the following:

1. Allocation of resources: The law of scarcity helps to allocate the economic resources optimally. The more the resources are scarce, the more will be the price. A high price will lead to the use of the resources to highly important and non-substitutable work.

2. Artificial scarcity: The law of scarcity is used to maintain the artificial scarcity of a commodity and services in the economy to increase the price of goods and services.

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