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What is relative scarcity in economics?

Economics Dec 12, 2020

What is relative scarcity in economics?

Expert Solution

Relative scarcity:

When scarcity exists because of problems about supply or distribution despite the presence of physical quantities of a resource, it is known as relative scarcity. It might be the case that we may have to exploit lower quality resources to meet the demand of the resource that is relatively scarce.This can be explained with the help of following examples. Food production might require cultivating lands that are not well suited to farming, say on steep slopes or in very arid areas, that might require a greater effort, say more labor and other factors of production like chemical fertilizers, irrigation in order to meet the demand. Another example could be the exploitation of fossil fuels. When we exploit the most accessible and good quality fuels , say sweet crude from the Middle East or other areas, we may turn to lower quality fuels such as tar sands to meet our needs.

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