Raybert has a very short-term investment objective and has decided to purchase money market instruments. There are plenty of 90-day money market…

The scenario highlights the fundamental economic principle of scarcity. Raybert has a limited amount of capital to invest, while multiple issuers are demanding that capital. The issuers are competing for this limited resource. Scarcity, in this context, means that the demand for investment capital exceeds the available supply. Raybert's inability to fund all potential investments, despite the issuers' needs, is a direct consequence of the scarcity of his capital.

A. Mobility refers to the ease with which capital can be moved between investments or locations, which is not the primary characteristic being demonstrated here.
B. Risk is the uncertainty of returns on an investment. While present in any investment, the core issue described is the limited availability of funds.
D. Sensitivity describes how capital reacts to factors like interest rates or political events, not the limited quantity of the capital itself.

1. IFSE Institute, Canadian Investment Funds Course (CIFC), Chapter 2: The Economic Environment, Section: "Characteristics of Capital," pp. 2-5. (This section typically explains that capital is scarce, mobile, and sensitive).

2. Bodie, Z., Kane, A., & Marcus, A. J. (2021). Investments (12th ed.). McGraw-Hill Education. Chapter 1: The Investment Environment, Section 1.1: "Real Assets versus Financial Assets," discusses the role of capital in the economy and its allocation.