Planet Money: The Pickle Problem

Oxford College Principles of Microeconomics Course

From Planet Money:
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.