Definition of Scarcity

An unlimited desire with limited resources is known as scarcity in economic scenario. In the market, this problem arises when people/customers or buyers have unlimited wants whereas available resources are very limited.

Explanation

The economic value of products increases when they are scarce. So the economic or exchange value of something is different from its intrinsic or use-value. Intrinsic value is determined by necessity; economic value is determined by scarcity. For example, water is valuable for human survival. If it became scarce, its economic value will increase.