Question

What is the meaning of this sentence: Scarcity as faced by an individual: explain how individuals are constrained by their income and prices they face.
Please can someone explain it in more detail? Thank you

Answer 1

Ans- Scarcity means shortage. There is always scarcity of resources because of the human nature. As we know that human wants are unlimited. One after another want will arise. When one want is completed then another want would take place but the resources remains the same. That is why there is always scarcity and what individuals face.

Individuals are sometime constrained by their income and prices. Suppose a person wants to buy a good which worth more than his income. Then his income would be scarce for him. It means he/she doesn't have enough resources to buy that thing.

Similarly if we talk about price, if an individual cannot afford the price of the product that it means he have scare resources.

This process is completely known as budget constraints.