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Definition

A key concept in economics that all goods, both primary (as in raw materials) and secondary (as in finished products) have a finite supply which is exceeded by the demand for them. The relationship between the supply and demand comes into balance at the product's price. If the product is scarce and has no ready substitutes the price will be high and vice versa. The more scarce a product is, the higher its price will generally be. This can be seen especially in gold where most of the gold mined is simply hoarded as a store of wealth. The metal itself has limited industrial uses and some jewellery demand, but all the gold ever mined in the world would not fill an Olympic-sized swimming pool. So it is relatively rare and hence valuable.

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