What is a potential consequence of scarcity in economics?

Scarcity in economics refers to the limited nature of society's resources, which means that there are not enough resources to satisfy all wants and needs. When scarcity occurs, the basic principle of supply and demand comes into play, leading to an increase in consumer prices.

When resources are scarce, the competition for these limited goods often drives prices higher, as consumers are willing to pay more for the available items. Sellers recognize this willingness to pay and may increase their prices correspondingly. This increase can also reflect the higher costs of production that may arise when resources are in short supply.

Therefore, the connection between scarcity and rising consumer prices is fundamental in economics; as demand for limited resources rises, and if supply doesn’t increase to meet this demand, prices will naturally go up.