“The three central coordination problems any economy must solve are what to produce, how to produce it, and for whom to produce it” (Colander, 2004a, p. 5). Generally, individuals want more than is available which creates a problem of scarcity where there are too few goods available to satisfy individual desires. As our textbook states, “all scarce goods or rights must be rationed in some fashion. These rationing mechanisms are examples of economic forces, the necessary reactions to scarcity” (Colander, 2004b, p. 9). The U.S. rations food by price which is determined by supply and demand. Despite technology advances, scarcity would never be eliminated as new wants are constantly developing as can be seen in the many new products continually introduced on the market. The attached article published in the Beaumont Enterprise in October of 2006 deals with the dilemma of scarcity and how it affected the United States (U.S) orange juice market at that time
The article described continually increasing prices of orange juice due to “Florida’s hurricane-ravaged groves” (Reed, 2006a) and sub-standard production three years running. The small crop yield estimates had continually driven price for consumers up as they were already paying a 9% jump in average retail prices of $4.83 per gallon while the market had met a 6 % drop in volume (Reed, 2006b). The increase in price works just as the law of demand states. The quantity of goods, orange juice in this case, is inversely related to price. That is the quantity demanded is higher then the quantity supplied which caused the prices to rise.
In this case, not only the consumers were affected but also the major juice makers like PepsiCo Incorporated and Coca-Cola Company were affected. Pep ...