Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter ST10, Problem 1CQ
To determine
Effects of scarce resources in market activity.
Expert Solution & Answer
Explanation of Solution
If the world were about to run out of a highly valued resource, then the resource is a scarced one. This scarcity of resources will make its price to increase in the market. Due to the price hike, the consumers will reduce their purchases. But due to the increase in demand, the producers are forced to produce the particular product. This will lead the producers to find the different methods to increase the future supply. But due to the unavailability of resources, all substitute the particular product with a different substitute. These will affect the future supply of resources and make an increase in it, relative to the quantity demanded. But as a result, the resource will reduce very poorly.
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Chapter ST10 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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