Economics from a six year old

Last week on the way to swim lessons Ashton gave Bob and I a great lesson in Economics from the point of view of a six year old. I will attempt to recreate the conversation from memory so I might not have this exactly right but I think you'll get the point.

Meg: Where did you get that?

Ashton: The dollar store.

Meg : I'm surprised dollar stores still exist. Are things really still a dollar?

Ashton: [gushing animated voice] Oh yes! Everything in the store is a dollar, which is really great since you always know exactly what it is going to cost. You see, in some stores things might be $3.00 or $5.00 or $10.00 so it's hard to know how much it costs but at the DOLLAR store you know exactly what it costs and you can buy it because it's only one dollar.

Meg: I see. That *is* nice. But I wonder how they make any money selling everything for a dollar.

Ashton: oh they make a LOT of money because so many people want to buy things for a dollar!

Meg: but what if the things they are selling cost them $2.00, what would happen then?

Ashton: well, that wouldn't happen, because everything there is ONE dollar, so you see..

Meg: Yes, I do see....

[short pause]

Ashton: Well, it might take them longer to make money, but they would make a lot of money, because, you see, they sell everything for one dollar and that's so great.

Bob and Meg: You are so right Ashton, that *is* really great.

Meg to Bob: I really need to remember to blog that.

[end conversation]

So there you have it -- it might take them longer but they have themselves an outstanding business model that is well within the grasp of any enterprising six year old.