How are wants and needs affected by the scarcity of resources?

Economics Dec 12, 2020

Expert Solution

Wants and need are directly affected by the scarcity of resources. As the resources get scarce in nature and the alternate of that resource is either not available or has a very high switching cost then, need and wants of that particular resource increase dramatically. Such a situation forces consumers to effectively allocate resources for satisfying their basic needs.

For example, coal and petroleum. Because of the scarcity of both these products, the demand for both the commodities is high and the prices of both commodities have increased.

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