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LESSON: ONE GRAIN OF RICE
Lesson Summary
A raja in
India decrees that the rice farmers in his province must give him
nearly all their rice to store for himself. After a bad growing
season, the raja continues to demand the rice, and the people are
faced with a severe scarcity problem - famine. Luckily, a
young maiden develops a plan to get the rice back from the
raja.
Concept: Scarcity
Definition: Scarcity is the condition of
not being able to have all of the goods and services that you want.
Comprehension Questions
What good
did the farmers in the story produce?
Rice
Is rice a scarce
good?
Yes! It is a tangible item that people produce using
productive resources (natural, human, and capital). Thus, rice is not
a free good. Like all scarce goods, it commands a price in the
marketplace.
Why did the rice farmers give almost
all of their rice to the raja.
He commanded it. In return, he
promised to store the grain.
What happened when the famine
occurred?
The supply of rice decreased and the people had almost
nothing to eat. Rice, which is already a scarce good, became much
more scarce!
When a good becomes more scarce, what
typically happens to the price?
It increases.
When the price of rice rises compared
to other goods, what do producers of rice typically do?
Produce
more rice! In the near term, this will cover higher production costs
and, hopefully, earn the producers more profit.
When the price of a good rises
compared to other goods, what do consumers of rice typically
do?
Consume/purchase less rice!
Other Concepts: Economic
Wants, Producers, Price, Supply and
Demand | 
