In order for a good, resource, or service to be considered scarce, it must have an amount of limited supply and also have a rising demand in the market.
Scarcity refers to that condition in economics when the demand for a specific commodity is greater than its supply. The limited amount increases the demand among the people and thus becomes a scarce resource.
If the demand is high and the amount is limited, people would be willing to buy the commodity at a higher price. Thus, in this way, the price of the commodity also increases.
Scarcity is mostly witnessed in a market in situations of wars, epidemics, and lockdowns. People try to gather as many resources as possible in these situations, which leads to the over-demand for goods.
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