EWOT Goggles #12

Today I went to the supermarket with my friend to buy some food.

I was in the mood to buy some chips and salsa, so I went to that aisle to get some.

When I got to the salsa, I looked at the price and it was extremely high for my tastes- $4.00. I couldn't believe it and I had no idea why the price was so high.

I remember going shopping for salsa with my mom during high school, and although I can't remember the exact price of salsa, I know for sure it did not cost anywhere close to $4.00.

I stopped to think for a moment and thought back to our lessons this past week and the week before about rationing through the price system. I came to a couple conclusions about the price change in salsa in economic  terms.

For one, the price of the salsa was such because that is a price at which people value it. As we learned with Prof. Rizzo's hotel room example at the Masters Golf Tournament from class, if there was not another person willing to buy the salsa at that price, it wouldn't be listed at that price because then no one would buy it.

I also thought back to the lessons we learned about rationing goods. It is clear that the price of the salsa reflects rationing through the price system: If the price was as low as it previously was when I was in high school, perhaps the demand would be too high. Thus, the quantity demanded would shoot up. As a result of this, the quantity supply might behave oppositely and go down (supply/demand curve).

Thus, with the suppliers producing less salsa, there is not as much in circulation. Therefore, the price system makes it so those people who value/desire the salsa the most will be able to get it- in the end, I really wanted salsa badly so I bought it. This shows that I valued having the salsa highly, and perhaps the high price of it prevented another person who did not value it as much at that price from buying it before I could get to it.

Although I did end up buying the salsa, I did consider a couple things: were there any good substitutes I could get instead of salsa. My options were as follows:

1. Get a different, cheaper dip.
2. Make my own salsa.

Option 1 was possible but I really wanted to eat salsa, so another type of dip was not a substitute in this instance.

Option 2 was a substitute, but I concluded that I valued my time more than saving a few dollars of money, and thus, it was worth it to me to buy the salsa at $4.00.