Liquid Gold? Sriracha Bottles Selling as High as $80

EconEye Admin

3 years ago

Prices for Sriracha are skyrocketing as the prolonged shortage of the chili peppers central to the recipe of the popular hot sauce is creating a Sriracha shortage.—usatoday.com

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

What is creating the Sriracha shortage?

a) a decrease in the supply of Sriracha with no change in demand

b) a decrease in the supply of Sriracha that is greater than the decrease in demand

c) a decrease in the supply of Sriracha and an increase in demand

d) an increase in the demand for Sriracha with no change in supply

Wrong! - Does the prolonged shortage of chili peppers change the supply of Sriracha? Does the prolonged shortage of chili peppers change the demand for Sriracha?

Good Job! - The prolonged shortage of chili peppers, used to make Sriracha, is creating a decrease in the supply of Sriracha, and with no change in demand, a shortage of Sriracha occurs.

How does the rise in price of Sriracha change the market for Sriracha?

As the price rises, _____________.

a) demand decreases, and with no change in supply the shortage decreases

b) the quantity demanded decreases, the quantity supplied increases, and the shortage decreases

c) the quantity demanded decreases, the quantity supplied increases, and the shortage becomes a surplus

d) supply increases, demand decreases, and the shortage decreases

Wrong! - Does a rise in price change supply or the quantity supplied? Does a rise in price change demand or the quantity demanded?

That's Right! - As the price rises, the quantity demanded decreases and the quantity supplied increases. With the decrease in quantity demanded and the increase in quantity supplied, the shortage decreases.

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