Question

Outline the ‘theories of resource scarcity’. State the reasons for which Bowers (1977)

rejected the ‘scarcity hypothesis’.​

Answer 1

Answer:

The scarcity principle is an economic theory in which a limited supply of a good, coupled with a high demand for that good, results in a mismatch between the desired supply and demand equilibrium. In pricing theory, the scarcity principle suggests that the price for a scarce good should rise until an equilibrium is reached between supply and demand. However, this would result in the restricted exclusion of the good only to those who can afford it. If the scarce resource happens to be grain, for instance, individuals will not be able to attain their basic needs.

Explanation:

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Answer 2

The reasons for which Bowers (1977) rejected the scarcity hypothesis according to theories of resources scarcity are explained below:

- A mismatch between the desired supply and demand equilibrium is the result of an economic theory known as the scarcity principle in which a high demand of good is coupled with the limited supply of that good.

- Until and equilibrium is reached between supply and the demand according to the pricing theory the price for a scarce good should rise as suggested by scarcity principle.

- Restricted exclusion would be the result of the good only to those who can afford it.

- For instance, resource happens to be grain individuals will not be able to attend their basic needs.