Scarcity
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Reducing price cannot solve scarcity problem. Scarcity means short supply of certain thing relative to demand at any given price. Unless the price is raised, supply will not rise and demand will not fall so that the demand and supply equal at a given higher price.
When there exists scarcity, if the price is reduced scarcity will increase as the demand will increase but supply will fall. Layman thinking is however opposite and incorrect influenced by problems suffered by the people who cannot afford high prices. They think the because the price is high only rich people are able to purchase things and hoard then and consequently poor people are deprived of the goods they need to buy and but cannot buy because of high prices. They do not think about what happens to demand, supply and mismatch between demand and supply if the prices are reduced. Often for neccaity/ essential good in short supplies, govts. supply rationed quantities to poor people at subsidized price.
Energy and fuel is in short supply, so prices of gasoline has increased. If the prices are reduced arbitrarily, more gasoline will be demanded. On other hand, if gasoline prices rise further, it is possible that use of alternative fuels/ energy to drive cars will become economic and these solar powered/ dio diesl powered/ electric battery operated vehicles will become competitive to gas powered vehicles.
To get further convinced that you are right about the statement " The most efficient way to reduce scarcity is by reducing price" being False read the notes and visit the sources listed below..
Notes:
1.In economics, scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient productive resources to fulfill those wants and needs. Alternatively, scarcity implies that not all of society's goals can be fully attained at the same time, so that trade-offs are made of one good against others.
Reducing price cannot solve scarcity problem. Scarcity means short supply of certain thing relative to demand at any given price. Unless the price is raised, supply will not rise and demand will not fall so that the demand and supply equal at a given higher price.
When there exists scarcity, if the price is reduced scarcity will increase as the demand will increase but supply will fall. Layman thinking is however opposite and incorrect influenced by problems suffered by the people who cannot afford high prices. They think the because the price is high only rich people are able to purchase things and hoard then and consequently poor people are deprived of the goods they need to buy and but cannot buy because of high prices. They do not think about what happens to demand, supply and mismatch between demand and supply if the prices are reduced. Often for neccaity/ essential good in short supplies, govts. supply rationed quantities to poor people at subsidized price.
Energy and fuel is in short supply, so prices of gasoline has increased. If the prices are reduced arbitrarily, more gasoline will be demanded. On other hand, if gasoline prices rise further, it is possible that use of alternative fuels/ energy to drive cars will become economic and these solar powered/ dio diesl powered/ electric battery operated vehicles will become competitive to gas powered vehicles.
To get further convinced that you are right about the statement " The most efficient way to reduce scarcity is by reducing price" being False read the notes and visit the sources listed below..
Notes:
1.In economics, scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient productive resources to fulfill those wants and needs. Alternatively, scarcity implies that not all of society's goals can be fully attained at the same time, so that trade-offs are made of one good against others.