We were told to stay home and isolate whenever possible. In response, many of us sought our favorite comfort foods and shopped at grocery stores more than ever. In this post, we look at the market for this author’s preferred isolation meal: pasta.
What happened to demand?
Governments the world over prevented consumers from entering restaurants, leaving the restaurant owners either to offer exclusively take-out service, or to close their doors for the duration of the pandemic. Consumers shifted their “going out” budgets to grocery store purchases. The demand for pasta at grocery stores increased.
What happened to the price?
When the demand for pasta increased, the new quantity demanded exceeded the quantity supplied at the original price. Shortages were created, leaving shelves empty. Since the beginning of 2020, the price of pasta at grocery stores has increased more than 3%. The price rose to eliminate the shortages.
What happened to the quantity?
As the price of the pasta increased, firms across the U.S. ramped up production by about 30%. The quantity of pasta sold at grocery stores increased.
Let’s look at a graph of the pasta market.
Now take a short quiz to check that you understand what you just read.
Multiple Choice Test: COVID-19 Pasta Price Shock