Question

Part I- Short-Essay questions-Answer any two (2) of the following eight(8) questions for 40 points total or 20 points each. 1. How does competition arise out of scarcity? To help organize your answers, first, define what scarcity is. Second, explain why competition arises out of scarcity. Finally, provide some real-world examples in how competition arises out of scarcity in today's economy or from your own personal experiences besides the examples that were brought up in class and in your notes. I mainilu The_r and for a limi

Answer 1

Scarcity is an economic problem which highlights the gap between resources which are scarce and wants which are unlimited.As a result people have to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.Scarcity is when the means to fulfill ends are limited and costly.Even free natural resources can become scarce if costs arise in obtaining or consuming them, or if consumer demand for previously unwanted resources increases due to changing preferences or newly discovered uses. Scarcity is caused when there is increase in demand but no corresponding increase in supply or supply being dimnished but not followed by reduction in demand. Because of scarcity competition arises.Competition occurs when people strive to meet the criteria that are being used to determine who gets what.For Example Air is freely available and one does not have to pay any price for it. On the other hand Gold which is highly priced and has high production cost. It is found processed and require lot of efforts.Air is more important but less scarce as compared to Gold.If a consumer wants to buy gold he will have to forgo some of other wants.Another example could be petroleum which is scarce resource and is available in gulf countries. Powerful nations want to control these gulf countries so that they can have access to this scarce resource called petroleum.It is only because of scarcity there is a need for a rationing device. People will compete for the rationing device. For example if dollar price is the rationing device, people will compete for dollars. Let us suppose instead of dollar muscular strength was the rationing device. In such a case people will be found working out more in gyms to increase their muscular strength instead of earning dollars.If the resources were not scarce people will not compete.A student wants to get good degree to get high paid job after graduation as jobs are scarce. More income will help student to satisfy more wants.