NIKE DUNKS AND SCARCITY

A more tangible (easily imagined) example might be sneakers. When Nike releases a new Dunk, its not like they do not produce a seemingly unlimited amount of pairs, however what they release is often extremely limited to the point where humans (we are crafty) have created bots to ensure they do not miss on on this good. This presents another problem. Scarcity is not constant! It depends on human action, ingenuity, and discovery. At one point Dunks were of the lowest demand meaning nobody wanted a Dunk unless it was an SB. So you could essentially get as many Dunks as you wanted no problem, so long as it wasn't an SB. One could say the market for an SB was way larger (much more potential for buying and selling) than for a regular Dunk.

Dunk Low SB 'What The Dunk' | GOAT

NIKE DUNK SB (usually see skaters wear them)

1. Pillow for a tongue

2. Sole made with Zoom Air unit and Poron Foam

3. More rings and thiner rings on Sole for better grip

4. Thicker Rounder laces for less fray

NIKE DUNK LOW (custom)

1. Thinner Mesh tongue

2. Thinner Sole made with EVA

3. Same traction as the Jordan 1

4. Flat thinner laces

However, due to new discovery by a younger generation (you all) who have used the Dunk to create tons of new styles and revitalize some older ones, the demand has gone up! Meaning Nike has produced more.

source

So why is it scarce? In our society, typically when interest is high in a product, a company will keep producing enough to satisfy that demand to gain the most possible amount of profit. However with the new trend of "HYPE" we have seen a shift in the market. Now, when there is an extremely high demand for something, companies release less of the product so that only a limited amount of people get them creating more HYPE around the product. So they are gaining a maximum profit by reducing the level output. HYPE in this case is just an extreme amount of demand or interest, sometimes illogical. Dunks are probably the least expensive shoe Nike has to produce, the quality is way worse than most of their other pairs. In addition, NIKE imports their shoes (made in Eastern Asian nations) which also adds to the cost, but because they can export directly from those nations they do not have to worry about extra taxes from the United States. Meaning in theory they should be able to produce and release more. But instead they release less because the demand skyrockets regardless of quality, allowing them to sell Dunks at their regular rate maintaining their profit, keep overstock of product, and produce them for an extremely low amount. Here we see NIKE operating within the bounds of United States monetary policy. However, due to globalization we can see NIKE's market has crossed national borders. Europe and the Middle East are the second largest consumer of Nike products.

This is all while resellers flip them to sell for up to 10x the retail price (usually $110-1$140) depending on the shoe further increasing the demand. This phenomena happens with little to no government regulation in line with the market style of economy in the United States.

We might consider this resell market (interactions between sneaker guzzlers and sneaker buyers) an underground economy - a market where buyers and sellers make transactions in violation of one or more government regulations.

Because Scarcity Exists, We Must Make Choices

In the end, because resources, goods, and services are scare, choices have to be made. In terms of the economy, we have limited resources to utilize to produce all of the things that we want and need. There is only so much usable land (natural resources: land, lumber, soil, energy), labor (work effort by humans or machines now in days), capital (physical goods that are used to produce other goods like machines & technology), and time in a day to produce all of the food, entertainment, shelter, medicine, clothing, and so on (Think about who owns all of these things).

Because we can't simply produce everything we want, we need to make hard decisions about what to produce, how we are going to do it, and who is going to get what we produce. For example will NIKE release a regular Dunk or a Dunk SB? Will they release it on the SNKRS app or will they give pairs to specific store fronts so that those store fronts may hold raffles? Who will be able to get pairs based on these decisions? What might impact who gets a pair? Yet, you see I have some Dunks, some of your classmates have Dunks, and some of OPS has Dunks. Despite the odds, scare resources represent our ability as humans to satisfy some of our unlimited wants. This is a big deal, it shows human capability, separates us from other animals. This shows us that scarce resources can be some of the most valuable resources. yes or no.png

So what about you? Are you taking all the classes that you were hoping this semester? Chances are you had to make some compromises somewhere. Or maybe you had no choice at all? Maybe the class you hoped to take *cough* *art* wasn't available during a time that worked with the rest of your schedule. You had to decide (or maybe it was decided for you) if you were willing to give up that class with Mr. Stephens in order to take the class you needed to graduate because the timing worked better. You faced a trade-off.

Every society faces trade-offs. Every family faces trade-offs when they decide to go on vacation instead of buying a new couch. Navigate faced a trade-off when they decided to invest in E-HallPass to reduce the amount of time students spend in the bathroom instead of investing in training for staff to make the classroom more engaging or evaluating the curriculum.

Evaluating costs and benefits allow us to identify the trade-offs that exist with each choice. Choices are inevitable because of the problem of scarcity. The value of what we have given up, is the opportunity cost. The opportunity cost for some of you taking Psychology is Art or for some of you the opportunity cost for taking theater is Engineering. The things you had to give up in order to take a different class. Kipps is different because it takes away your choice as far as picking your classes so it might be a hard comparison for some of you. But those of you who got their first or second choice may be able to see the parallel between this idea of limited class availability and the choices of classes you can take.

All in all from this we can see that Economics is the study of human choice in the face of scarcity.

When making choices, there are three key questions that must be addressed:

1. What are we going to produce?

2. How will we produce it?

3. Who will get what we decide to produce (how will it be distributed?)