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Q.What is meant by artificial scarcity ?

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2024Subjective· 3mImportance★★★★★
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Artificial scarcity is a man-made shortage created by hoarding goods to push up prices and earn abnormal profits, and it is a form of consumer exploitation.

Artificial scarcity is studied under Consumerism in the Tamil Nadu HSC Class-12 Commerce syllabus as one of the ways in which consumers are exploited by unfair traders.

Meaning: Artificial scarcity refers to a shortage of goods that is deliberately created by traders and hoarders, even though enough stock actually exists. By storing goods and withholding them from the market, they make it appear that the goods are scarce.

How it harms consumers:

  • The false shortage pushes up the market price of the goods.
  • Traders then sell the hoarded stock at these inflated prices and earn abnormal (undue) profits.
  • Consumers are forced to pay much more than the fair price, especially for essential commodities like food grains, sugar and edible oil. …

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