Practice question · True or false
Anything scarce enough to command a positive price is by definition an economic good.
Hints
- Can something scarce still be free at the point of use?
- Think of a good priced at zero by policy.
Show the answer
False
Why
False. Scarcity is what makes a good economic, and price is a market outcome rather than the definition. Goods that are genuinely scarce can carry a zero price — a congested public road, or clean water where it is provided free — and that mismatch between scarcity and price is exactly where shortages and externalities appear.
Practise Scarcity
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More questions on Scarcity
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- Order the logical chain from scarcity to prices.