SCARCITY PRINCIPLE

Scarcity Principle is an economic theory. It states that a mismatch in the desired supply and demand equilibrium will occur if there is limited supply of a good with a high demand for that good. In pricing theory, the scarcity principle means that a good limited in supply will inevitably have its prices go up and will continue going up until an equilibrium between supply and demand is achieved. The arising problem with the scarcity principle, however, is that it paves way for restricted exclusion of the good as only those who can afford may buy it. For example, if grain becomes scarce in resource, it means that its price will go up due to its rarity thus only people who can afford would be able to cover basic needs. The rest have to find other resources to replace the basic need.

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