The Economics Behind the Charlie and the Chocolate Factory
Charlie and the Chocolate Factory is a visual representation of every chocolate lover's dream. As much as we enjoy watching it, much to our surprise, there’s a lot that we can learn from it. You will find some of the most important and intriguing economic concepts deeply embedded in the film.
Though it may not be an accurate representation of the application of economic principles, the fundamentals, however, remain apt. Let's unravel the economic principles behind the fascinating movie!
The entire study of economics is fabricated on one simple concept – scarcity. Scarcity refers to nothing but a shortage of supply in comparison to demand. Human wants are unlimited; the resources, however, are scarce.
This concept is emulated in the movie in the form of the golden tickets. There were only 5 golden tickets in the entire world as compared to millions of people who wished to have it. Therefore we can say that there was a scarcity of the golden tickets.
The problem of scarcity was also observed in the form of limited means of survival as witnessed by Charlie’s family. This reflects the scarcity of resources present in our society. The movie also highlights the problem of unequal distribution of wealth between the rich and the poor.
The next concept that we come across is opportunity cost. Opportunity cost refers to the next best alternative forgone. When an option is chosen from the given alternatives, the loss of potential gain incurred by not choosing the other alternative is known as opportunity cost.
In the movie, Charlie had an option of either keeping the golden ticket or selling it, had he chosen the latter, he would have earned some good money to fend for his family. However, he decided to keep the ticket thus making the money that he could have earned by selling the ticket, the opportunity cost.
Another important concept that we learn about is Innovation in marketing. Marketing refers to the activities undertaken by a company to promote their product or service. The sale of your product often depends on the extent of marketing. The movie shows just this. By hiding 5 golden tickets, the sale of the Wonka bars shot up. This was an absolute genius by Willy, who had earned more than he would spend on the children’s trip to the factory.
Disclaimer: Next time you wish to sell your product, you know what to do!
Since the demand for the golden ticket was exceptionally high as compared to the quantity supplied, people were willing to pay any price for the ticket. This brings to light another very important concept of economics – determinants of demand.
With the increase in demand for a product, due to change in taste or preference or change in income of the consumer, the demand curve shifts to right because of which the price of the product increases.
People bought more and more chocolates in order to increase their chances of getting the ticket. The powerful invisible hands of demand and supply have been effectively portrayed in the movie.
In order to produce a good or service, certain inputs or resources are required. These inputs are known as factors of production. The four factors of production are land, labor, capital, and enterprise. With these factors of production comes at a certain cost. The cost of production refers to the total cost incurred by a firm in order to produce the desired commodity.
In the movie, the Oompa-loompas signified the factors of production and cocoa beans offered to them signified the cost of production.
The Oompa-loompas also practiced the policy of division of labor. Each of them performed the task specified to them thereby, increasing their efficiency and effectiveness.
The next fundamental principle that catches our attention is derived demand. Derived demand refers to the demand for a particular good or service resulting from the demand for another good or service.
An example of derived demand that can be seen in the movie is the increase in demand for toothpaste because of the increase in sales of chocolates. As people bought more and more chocolates, dental and oral diseases surfaced. Consequently, the demand for toothpaste started rising exponentially.
In order to meet the growing demand for toothpaste, the requirement for a more advanced form of production was required. This caused the structural shift and consequent structural unemployment.
Structural unemployment refers to the involuntary loss of jobs caused by a mismatch between the skill-set demanded and the skill-set offered by the workers. When the demand for toothpaste continued to rise, the toothpaste company had to replace human workers with advanced technology in order to meet the increasing demand.
Isn’t it fascinating to realize that a simple tale of a chocolate factory could have such deep economic concepts hidden behind it?
There are many more concepts that I haven’t penned down. I’m going to leave it to you all to find it. Hopefully, the next time you watch the movie you’ll see it more closely!
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