The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 9

In an article on hoarding in the United States in which a number of social scientists were quoted, a sociologist said that gasoline hoarding was not rational, but a result of Americans' emotional stake in their cars. A historian said hoarding was an absolutely typical American trait. Some attributed hoarding to a "shortage psychosis," and others spoke of "panic buying." Another sociologist said that strong leadership was required to stop such "competitive behaviour."
(a) How could we decide whether hoarding is irrational, psychotic, A national character trait, a product of emotion and panic, or an intelligent response to uncertainty?
(b) What is the difference between hoarding and maintaining an appropriate level of inventory?
(c) Why do both business firms and households maintain inventories? How do they decide on the proper level of inventories for particular goods?