Little Red Riding Hood : Scarcity

When wants are greater than resources available to satisfy, it forces us to make a choice. Imagine if Red Riding Hood did not have enough to satisfy the wolf, what would have happened?

Adorned in a red cloak a pretty girl with big blue eyes and blond curls. “Get ready my dear, and don’t forget to wear your grandmother’s cloak,” said mother. “ And take to your granny some cakes, sandwiches, fresh vegetables and some ginger ale.” Along she went skipping into the woods only to have encountered the Big Bad Wolf. “ Oh, dear! How my stomach rumbles,” said the wolf. The wolf, however, is not after the treats in the basket. He wants more because his belly is never full. This fairytale perfectly captures the concept of scarcity. Scarcity is the result of the limitation of supply in relation to the demand for any commodity. Scarcity drives us to make choices, and economics is all about making choices in the presence of scarcity. Thankfully Little Red Riding Hood had enough goodies in the basket to satisfy the needs of the wolf. Can you imagine what would happen if she didn’t? Hearing the sound the little girl offers to share her food with the hungry wolf. The wolf should be satisfied now that he has a full belly but, just like humans, his wants are unlimited. “ I am cold too,” said the wolf. “Well,” said the little girl “My granny can make a cloak for you, she knits well you see; she has a factory too.” This clever little girl got the hardworking producer(her grandmother)a faithful consumer (the wolf).