Learning markets and pricing from food banks : Planet Money In our second class, we meet our old friends supply and demand and do graphs using only the power of the human voice. Then, we show you how markets can be created anywhere by telling the story of a food bank that had too many pickles and not enough pancake syrup. It's economics to the rescue. | Subscribe to our weekly newsletter here.
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SUMMER SCHOOL 2: Markets & Pickles

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SUMMER SCHOOL 2: Markets & Pickles

SUMMER SCHOOL 2: Markets & Pickles

SUMMER SCHOOL 2: Markets & Pickles

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  • <iframe src="https://www.npr.org/player/embed/891488686/893764717" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Artwork by Therrious Davis. Therrious Davis for NPR hide caption

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Therrious Davis for NPR

Artwork by Therrious Davis.

Therrious Davis for NPR

Find all episodes of Planet Money Summer School here.

In our second class, we find markets everywhere and discuss what makes them work and when they fail.

We start off with the basic tools to understand a market: supply and demand. We find that the price of an item isn't just about money; a price reflects all the information inside a market, from a buyer's willingness to pay to a supplier's cost to make that item.

Then, we put the concepts to work with the parable of the pickles. A food bank in Alaska gets sent a truckload of pickles, more than it could ever use. A food bank in Idaho gets sent a truckload of potatoes, the last thing it needs. With the help of economists, the food banks figure out a way to create a trading market, complete with information sharing and prices. We see how that works out as the food banks compete for the most coveted prize of all: a shipment of breakfast cereal.

Concepts:

  • Supply and demand
  • Local knowledge problem
  • Gains from trade
  • Information asymmetry
  • Monopoly

Assignment:

  • Pick an organization that you know well, maybe even your workplace. Are the decisions made from the top by people with limited information or are decisions made at the local level? Now imagine how that organization could change. Tell us about it. #PMSummerSchool

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