What are the causes and effects of scarcity?

The causes of scarcity are related to the supply and demand for any given product. For example, demand for diamond rings is fairly high, since people get married every day. Yet both diamonds and gold are rare, meaning that there simply aren't enough of both precious materials for every person in the world to receive their own. As such, scarcity exists for this particular product. Even if a product is fairly cheap (like a gallon of milk), if demand is high enough there will be no way that all customers get their own, also producing scarcity. Effects mainly include greatly increased prices, as the costs for anything will rise if there is more demand than available supply. Additional effects include hoarding, black-market exchanges, and intense competition for access to the raw resources needed to make a scarce product.