Which of the following BEST describes the main difference between scarcity and a shortage? A. While a shortage is a temporary ma
rket condition, scarcity is an ongoing condition in the world. B. While scarcity is a temporary market condition, a shortage is an ongoing condition in the world. C. Scarcity is found throughout the world, but shortages only occur in wealthy countries. D. Shortages occur everywhere, but scarcity happens only in countries with very high poverty levels..
Scarcity is an ongoing condition in the world that affects every single country and person, independently of the level of income. It is referred to the existence of limited resources to satisfy unlimited needs. Therefore it requires decission making processes to rank needs and to direct those scarce resources to cover the ones considered more important. Time is a resource, therefore it does not matter how much money you have, it is impossible to do two activities simultaneously, hence, you have to decide and you are affected by scarcity.
On the other hand, a shortage is caused due to a temporary unbalance in a market, specifically when the quantity demanded by consumers exceeds the quantity supplied by the companies operating on it. The result is that some customers will not be able to buy the product they wanted and that the firms could have made higher profits in they had organized better. Due to this temporary misadjustment, prices of the product will go up and less people would demand the product once it has become more expensive. In the end, market forces will reestablish the equilibrium, where the amounts supplied and demanded are equal.
