Economics Lecture: Price Fluctuations of Turkeys and Roses

Introduction

• Exploration of economic phenomena: price falls and rises during specific holidays.
• Example: Price of turkey during Thanksgiving and roses during Valentine's Day.

Turkey Pricing at Thanksgiving

• Demand Spike
  • 1 in 5 turkeys consumed at Thanksgiving.
  • Total: about 750 million pounds.
  • Demand increases significantly, yet price falls by 10%.
• Demand Curve Analysis
  • Demand becomes less elastic.
  • New demand curve shifts out and becomes steeper.
• Supply Factors
  • Turkeys can be frozen, increasing available supply.
  • Over half a billion pounds in storage by October.
  • Supply increases more than demand, leading to price decrease.

Rose Pricing at Valentine's Day

• Demand Spike
  • Valentine's Day accounts for about a quarter of annual flower sales.
  • Demand significantly increases, price almost doubles.
• Supply Constraints
  • Roses cannot be frozen and stored.
  • February is not optimal for rose production in the US.
  • Imports offset domestic production loss from climate.
• Demand and Supply Curve Analysis
  • Supply curve does not shift significantly.
  • Higher costs due to imports and temporary production increase.
  • Result: Significant price increase.

Economic Explanations

• Substitution and Signaling
  • Substitution to other gifts (e.g., chocolates) is possible.
  • Expensive gifts can signal high investment in relationships.
• Main Conclusion
  • Turkeys are storable, allowing supply to meet demand increase.
  • Roses are not storable, and supply is less responsive to demand.

Insights

• Understanding these phenomena involves applying economic principles.
• Market behaviors are economically driven and not random events.

Closing Thoughts

• Encourage applying economics to real-world puzzles.
• Future discussions on labor market effects and gift signaling.