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In this lesson, you will explore how supply and demand impact prices through a real-world case study of rising egg prices in the US. First, you will analyse a Financial Times article to understand how factors like avian flu, production costs, and business decisions contribute to price changes. Then, you will apply economic concepts from a video on supply and demand to explain market shifts and predict future price trends.
Essential Question: How do supply and demand shape the prices of everyday goods, and what factors can cause prices to rise or fall over time?
Part One: Read the FT article ‘No signs of slowing’: US egg prices soar as avian flu rips across farms and then answer the questions below.
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What is the primary reason for the recent surge in US egg prices?
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How does Waffle House’s decision to add a surcharge on eggs reflect how businesses respond to rising costs?
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What role does Cal-Maine Foods play in the egg market, and how has the company benefited from rising egg prices?
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How does the concept of price elasticity apply to the egg market? Why do consumers continue buying eggs despite rising prices?
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Besides the loss of hens, what other factors are causing egg prices to rise?
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Why are some supermarkets selling eggs for less than what they paid for them?
Part Two: Reading Questions: Watch this video (7:50) on Supply and Demand and then answer the questions below.
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List the three reasons that explain the law of demand, and how might each reason apply to eggs?
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How do changes in consumer expectations affect demand, and how does this connect to the egg market?
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What is the law of supply, and how does it relate to egg prices?
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The video describes five factors that can cause the supply of a good to change. Choose one supply shifter and explain how it contributed to the decrease in egg supply and the subsequent rise in egg prices
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What happens when demand stays the same (or is inelastic), but supply decreases? How does this explain high egg prices?
Conclusion:
Joel Miller and James Redelsheimer, Foundation for Economic Education.
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