Thanksgiving Plans Changing for Many Over High Turkey Prices

Good Job! - Avian flu decreases turkey flocks and decreases the supply of turkey. Feed is a factor of production required to produce turkeys. With higher feed costs, the lowest price that a turkey farmer is willing to accept for a turkey rises so supply decreases.

Correct! - Price elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. The percentage change in quantity demanded is 25 percent. The price of turkey rose from $1.33 to $1.83 a pound, an increase of $0.50, and the average price is $1.58. The percentage change in price is 32 percent. The price elasticity of demand is 25 percent ÷ 32 percent, which is less than one, so the demand for turkey is price inelastic.