Econ 101: Still Haven't Gotten Your PS5? Here's What Its Absence Can Teach Us About Scarcity

Three years ago, Christmas came a month early for gamers across the world. Why? Sony had just released its long-awaited Playstation 5. Unfortunately, what many people didn't know back then was that there would be an enormous shortage of the console, causing its price to skyrocket and many gamers to spend hours waiting and searching for a PS5. In fact, many people still haven't gotten a PS5. Personally, it took me 7 months to find my own PS5 after months of following PS5 Twitter accounts and spending hours on Best Buy. But, after the long and enraging wait, I finally got my very own PS5!

Me and many others followed Twitter accounts like this for a PS5.

But what does Sony's hottest product have to do with economics? Well, it has a lot more to do with economics than you think. The shortage of the PS5 and its effect on its price is a perfect example of the scarcity principle. Scarcity in economics is not that different from the word "scarcity" you might cover in English classes – it happens when the overall demand for a good is greater than the supply of the good. Judging off the limited supply of the PS5, it's clear that the console is definitely subject to the scarcity principle.

But what caused the PS5 to become scarce anyway? Well, the COVID pandemic led Sony to limit the amount of workers producing the console, leading to less consoles to go around. The PS5 shortage was also brought on by a global semiconductor shortage, which are used to make chips for the console.

A shortage of semiconductor chips like these is the reason for the PS5 shortage.

Now that we know about the scarcity principle, how did it cause PS5 prices to soar? Well, this ties into another basic economic law called the law of supply and demand. We'll look more closely at this in a future post, but for now, the law of supply and demand states that when the demand is higher than the supply, the price will rise because the rarity of the good causes it to become more valuable to consumers and more expensive to make for producers. Basically, when a good is faced with the scarcity principle (becomes scarce), the price will rise. This explains why PS5 prices skyrocketed, even beyond $1,000 — it was simply because of its absence.

A basic supply and demand curve

Sadly, there's no fighting the market — the only thing we can do is simply wait for the shortages, especially the semiconductor shortage, to end. Although the wait for the PS5 may be long, and at times, frustrating, here's a little advice from someone who went through the same exact thing: keep waiting, and have some faith. The PS5 is definitely worth the wait.

Sources:

• https://education.nationalgeographic.org/resource/scarcity/

• https://www.investopedia.com/terms/l/law-of-supply-demand.asp

• https://medium.com/swlh/what-can-the-playstation-5-teach-us-about-economics-7fc55a0ac1b8

• https://www.makeuseof.com/is-the-playstation-5-shortage-over/#:~:text=What%20Caused%20the%20PS5%20Shortage,semiconductor%20manufacturers%20had%20fewer%20workers.

• https://www3.nd.edu/~cwilber/econ504/504book/outln3b.html#:~:text=An%20increase%20in%20demand%20and,%3B%20therefore%2C%20price%20will%20increase.

• https://www.trustedreviews.com/reviews/ps5

• https://www.theguardian.com/business/2021/mar/21/global-shortage-in-computer-chips-reaches-crisis-point

• https://acqnotes.com/acqnote/careerfields/supply-and-demand

• https://www.seventeen.com/life/g43623996/buy-now-pay-later-apps-websites/

• https://earlygame.com/gaming/new-ps5-slim-2023

• https://www.pcmag.com/news/warning-scammers-are-trying-to-trick-desperate-ps5-buyers-on-twitter