Question

Define and explain the term scarcity

Answer 1

Scarcity means when a particular resource/raw material is available in limited means. It means, not much of that resource is available. This means, the resource/raw material has to be used very properly.

For example, you are producing Unit A, that requires raw material X - 2 units per kg and direct labor hours of 2 per unit of A. You are also producing Unit B, that requires material X - 3 kg per unit of B and direct labor hours of 3 per unit of B.

Now if we say, that raw material X available for production is only 20,000 kg, this means we have limited availability of raw material X to use for production, we can further say raw material X is scarce.