You will hear an interview between Ms. Jane, a famous reporter and Mr. Peter Smi

Part Three
F: I’d like to welcome as my guest today, the economist Peter Smith.
M: Hello.
F: Furbies are very popular recently, but in FAO Schwarz, Manhattan’s big toy store, many children can’t get Furbies. Why are Furbies in such short supply?
M: The manufacturer seems to have deliberately made them scarce. They made about a million, which is not a lot. At my neighborhood store they have built up a backlog of 500 orders in the past week or so.
F: But why is the supply not enough?
M: If you want to sell, play hard to get. This law, in fact, may be biologically determined. Carefully arranged supply can make sellers rich. Look at diamonds, skilfully manipulated for decades by De Beers Consolidated Mines Ltd and its fellow cartelists. They could produce diamonds a lot faster than they do, but that would drive the price down and make diamonds less desirable.
F: So you mean it is a trick of manufacturers?
M: It’s old hat in the toy business. Toy. Inc. has made a large sum of money off its Beanie Babies by taking different models of these stuffed animals off sale before demand is satisfied, giving rise to a belief by who knows how many Americans that the cheaply made imports have some kind of collector’s value. For Hasbro, with $ 3.5 billion in 1998 estimated sales, a million Furbies retailing for $ 30 each add up to less than 1 % of sales. Nonetheless, restricting supply is a good move because it makes retailers happy with Hasbro. This is one product for which they won’t be stuck with unsold inventory. Oversupplying product is probably the greatest risk associated with fad marketing.
F: What do you do if your kid wants a Furby?
M: Persuade her that Tickle Me Elmo is a better doll. It’s certainly a better buy. Two years ago this toy was so hard to find that people were paying $ 500 for it on the black market. Now you can get one for $20.