Thanksgiving Plans Changing for Many Over High Turkey Prices

EconEye Admin

3 years ago

A quarter of Americans plan to forgo Thanksgiving in 2022 because of high grocery prices. Avian flu and higher feed costs have contributed to a spike in prices. The average price was $1.33 per pound at Thanksgiving 2021. Now prices are as high as $1.83 per pound.—kjzz.com

Answer the following questions to check your understanding of the story.

1) What is the effect of avian flu and higher feed costs on the turkey market?

a) Avian flu and higher feed costs decrease the supply of turkey.

b) Avian flu and higher feed costs decrease the supply of turkey and the demand for turkey.

c) Avian flu decreases the supply of turkey and higher feed costs increase the supply of turkey.

d) Avian flu and higher feed costs decrease the demand for turkey.

Wrong! - What is the effect of avian flu on a turkey flock? Feed is a factor of production required to produce turkeys. When the price of a factor of production rises, what happens to the price that a producer is willing to accept?

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.

2) If the demand for turkey doesn’t change, and the quantity of turkeys bought and sold decreases by 25 percent in 2022, what do we know about the price elasticity of demand for turkey in November 2022?

The demand for turkey is _____________.

a) perfectly inelastic

b) elastic

c) inelastic

d) unit elastic

Wrong! - 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. What is the percentage change in price? What is the price elasticity of demand?

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.

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