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Try the Elvis

Jim Wasserman

ECONOMICS IS ABOUT supply and demand. Call me biased, but I think why people demand particular goods and services is a whole more interesting than how suppliers do their thing.

It seems, however, that the topic of supply is unavoidable these days. We’re all hearing about supply chain woes. We’re all tired of seeing the empty shelf where our favorite crackers used to sit.

Even though economists will scream from the tallest Federal Reserve Bank building that supply and demand are separate and independent variables, let’s look at what’s going on with supply chain shortages—and how consumers can get some relief.

First, consumers need to understand that almost no desired good is actually a single thing. Goods are made up of multiple parts, each supplied to the ultimate manufacturer. Think of a car. Even if it says “Made in America” and you assume there are no import issues, the car itself is built of parts made in factories around the world. They’re connected by a huge transportation web that ultimately leads to the car dealer—and then to you.

A disruption in any key part, such as one made in China or Mexico, can slow or even stop up the whole works, causing a shortage. If transportation is interrupted—as with the Suez Canal closing in 1956—the ultimate good can’t be made or delivered.

To save costs, there are few redundancies built into modern supplies lines. We’re all paying for that now. The average American may not regularly travel abroad these days, but many of our products are still world travelers. The production line is a highly interconnected network, which most of the time is a good thing. Just not now.

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Are there things we can do on the demand side to lessen this circumstantial hit to our consumerism? Here are three ideas that may help.

Expand your suppliers. Yes, it’s more convenient to have Amazon drop stuff at your door or take a short drive to your local market. But that limits your choice, and choice is the key to economic empowerment. Try going to a different area of town. Ask friends and on social media where products might still be on the shelf. I’ve found that a lot of the stuff missing from my side of town is on the other side. I’ve also found smaller online ordering sites that have things that the big sites don’t.

Lose the nonessential. Pink may be your favorite color. But if pink earphones are scarce, evaluate what’s the truly essential attribute of the product. Sound quality is vital in earphones. Color preference can be surrendered.

We all want to impress others with the items we own. But we should consider whether a cheaper—and more useful—version of what we want would be better, especially given today’s shortages. Again, it’s all about expanding our choice.

Look for substitutes. Economists love to fancy up simple concepts. You like turkey, but the store is out, so you go for chicken, roast beef or even veggie as an alternative. These are called substitutes in economics. Like potential partners waiting on the side of the dance floor, substitutes are happy to step in if your usual partner doesn’t show. You might even discover a new favorite.

In economics classes, substitutes are usually taught along with the concept of complements. What are those? They’re products that go together like interdependent accessories.

For instance, if you always prefer a peanut butter sandwich with grape jelly, they are complements for you. If there’s no grape jelly, you can sulk and throw out the peanut butter. Or maybe you can try peanut butter and strawberry jelly—or even an “Elvis.” The singer’s favorite sandwich was peanut butter, banana and bacon. Trust me: It feels like a hunk of burning love going down.

Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. He’s the author of a three-book series on how to teach elementary, middle and high school students about behavioral economics and media literacy. He’s also authored several educational children’s books. Jim’s newest is Enough Stuff, a story about appreciating family and friends—rather than gifts—during the holidays. Jim lives in Texas with his wife and fellow HumbleDollar contributor, Jiab. Together, they’re currently working on a book, “Your Third Life: Reflections on Finding Our Way by Taking the Long Route.” Check out Jim’s earlier articles.

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Jim Wasserman
Jim Wasserman
10 months ago

Thanks, Parkslope. Here is a slightly more econ-y answer I gave on another sight, though years of watching students fighting their own eyeballs rolling to the top of their closing eye sockets now has me stripping the ideas down. https://www.moneygeek.com/economics/terms/supply/#expert=jim-wasserman

parkslope
parkslope
11 months ago

Although economists posit that demand and supply curves are independent variables, supply and demand factors clearly determine the price at which the two curves intersect. In the typical case, either the demand or the supply curve shifts which results in a new equilibrium price.

However, we are currently seeing large simultaneous disruptions of both supply and demand, which have shifted both the demand and supply curves up to a much higher equilibrium price.

Last edited 11 months ago by parkslope
Jim Wasserman
Jim Wasserman
10 months ago
Reply to  parkslope

Thanks, Parkslope. Here is a slightly more econ-y answer I gave on another sight, though years of watching students fighting their own eyeballs rolling to the top of their closing eye sockets now has me stripping the ideas down. https://www.moneygeek.com/economics/terms/supply/#expert=jim-wasserman

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