Title: Scarcity Principle Definition
Headings: Scarcity Principle
Scarcity Principle
What Is the Scarcity Principle?
Key Takeaways
Understanding the Scarcity Principle
Special Considerations
Scarcity Principle in Social Psychology
Example of Scarcity Principle

Content: In a free market, it can be expected that the price will increase to the equilibrium price, as the scarcity of the good forces the price to go up. When a product is scarce, consumers are faced with conducting their own cost-benefit analysis; a product in high demand but low supply will likely be expensive. The consumer knows that the product is more likely to be expensive but, at the same time, is also aware of the satisfaction or benefit it offers. This means that a consumer should only purchase the product if they see a greater benefit from having the product than the cost associated with obtaining it. Special Considerations
Scarcity Principle in Social Psychology
Consumers place a higher value on goods that are scarce than on goods that are abundant. Psychologists note that when a good or service is perceived to be scarce, people want it more. Consider how many times you’ve seen an advertisement stating something like this: limited time offer, limited quantities, while supplies last, liquidation sale, only a few items left in stock, etc. The feigned scarcity causes a surge in the demand for the commodity.