Definition of Scarcity Principle

When requirement and demand is more than available resources. It leads to mismatch between the desired supply and demand equilibrium, this as a result in economic principle. This scarcity principle suggests that the price of scarce products must rise until equilibrium between supply and demand is accomplish.

Explanation

When a product is in high demand and low supply Consumers try to conduct their cost-benefit analysis. The consumer knows that the product is more likely to be expensive but at the same time he/she is aware of the benefit it can give to him/her.