Scarcity exists when: making choices among two or more alternatives is not necessary. O individuals can have more of any good without giving up anything. O individuals can have more of one good but only by giving up something else. resources are unlimited. The slope of the PPF: is the opportunity cost of the goods on each axis. is the opportunity cost of the good on the horizontal axis. O is the opportunity cost of the good on the vertical axis. intercepts the origin. Figure: Demand and Supply of Gasoline Price (per gallon) $5 3 2.50 2 1.50 1 0 Reference: Ref 3-4 S S2 D 100 200 300 400 500 600 Quantity of gasoline (per month) (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the equilibrium after a change in supply from S to S: at the old price of $2.50, there will be pressure for the price to fall. the new price will be $2.00. the new quantity will be 600. the price will remain constant.