Allocating Scarce Resources

A Best Buy in Howell, New Jersey was selling 24-packs of bottled water for $40.56. A question for principles students: Should Best Buy be celebrated or derided for charging such a price? What would be the implications for the allocation of bottled water if Best Buy were to significantly lower their price?

2 responses to “Allocating Scarce Resources

  1. Put me down for celebrating! Russ Roberts’s “The Price of Everything” is a fun book for communicating this to non-econ types. (The two or three of them out there)

  2. Yes. Few seem to realize that if they were to sell the 24-pack for $4.99 or whatever they typically charge, there would be no water on the shelf to purchase. Prices allocate resources where they are needed most.

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