Question

Describe the relationship between a shortage of a resource and the cost of a good made from that resource?

a. Shortage increases cost
b. Shortage decreases cost
c. No relationship between shortage and cost
d. Shortage stabilizes cost

Answer 1

A shortage of a resource generally increases the cost of a good made from that resource.

Step-by-step explanation:

The relationship between a shortage of a resource and the cost of a good made from that resource is that a shortage increases the cost.

When there is a shortage of a resource, the demand for the good made from that resource exceeds the supply. This increased demand relative to supply leads to an increase in the price or cost of the good.

For example, if there is a shortage of oil, the price of gasoline, which is made from oil, is likely to increase.