Scene: A village in India. A large banyan tree provides shade, and a group of children are seated on the ground, waiting eagerly. Bigteacher walks in, carrying a small bag of items for his lesson. He stands before the children, smiling warmly.
Bigteacher: (cheerfully) Good day, my children! Today, I have two very interesting stories to share with you. Are you ready?
Children: (in unison) Yes, Bigteacher!
Bigteacher: (rubbing his hands together) Good! Our first story is about a beautiful golden necklace. Imagine it’s the most expensive and shiniest necklace anyone has ever seen!
Child 1: (excited) Like the one the rich lady in the big house wears?
Bigteacher: (nodding) Exactly! Now, only the wealthiest people in the village can afford it. And as more and more rich people buy this necklace, something strange happens – its price goes up. But instead of scaring people away, even more wealthy people want to buy it!
Child 2: (confused) Why would they want to buy something if it’s more expensive? Shouldn’t they save their money?
Bigteacher: Ah, good question! (pauses, thinking) You see, the more expensive it becomes, the more they want it to show off how rich they are. It’s a status symbol! They want everyone to know they can afford the most expensive things. (pauses) We call this a Veblen good. The higher the price, the more people want to buy it, just to show off their wealth.
Child 3: (nodding slowly) So, people buy it to look important?
Bigteacher: (smiling) Exactly! Now let’s move to the next story. Imagine a family in the village. They don’t have much money, so they always buy rice, because it’s the cheapest food. But one day, something surprising happens – the price of rice goes up. What do you think they do?
Child 1: (raising hand eagerly) They buy less rice!
Bigteacher: (shaking his head) You would think so, right? But no! Instead, they start buying even more rice.
Children: (in unison, confused) What? Why?
Bigteacher: (dramatic pause) Let me explain. They have so little money that when the price of rice goes up, they can’t afford to buy other foods like vegetables or meat. So, they buy even more rice, because it’s still the cheapest option, even though it’s more expensive than before. We call this a Giffen good.
Child 2: (scratching head) So, they buy more because they have no choice?
Bigteacher: (nodding) Exactly! When the price goes up, they still need to eat, so they buy even more of the rice, even if it costs them more. That’s the tricky thing about Giffen goods.
Child 3: (enthusiastically) Oh! So, the golden necklace is for showing off, but the rice is because they can’t afford anything else!
Bigteacher: (beaming) That’s it! You all understand perfectly. (looks around) Now, who can explain the difference between Veblen and Giffen goods to me?
Child 1: (confidently) Veblen goods are things rich people want more of when they get more expensive, to show off!
Child 2: (raising hand) And Giffen goods are things poor people buy more of when the price goes up, because they can’t afford anything else!
Bigteacher: (clapping) Well done, little ones! You’re all future economists! (laughs) That’s enough for today. Go home and tell these stories to your families!
Narrator: And so, with simple stories and everyday examples, Bigteacher taught the village children about Veblen and Giffen goods – complex ideas wrapped in simple tales. And the children, with bright eyes and eager minds, carried these lessons home to share with everyone.
