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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
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