http://news.yahoo.com/s/wisc/20070213/lo_wisc/10993944
This is local news about roses. Everybody buy roses for St. Valentines Day- this is an example of increase in demand in the period of time before this day that drives the prices up as well as the quantity demanded. I am not sure, but these changes in demand are caused by expectations for future.
What happened to supply and demand for roses this year is more than the natural increase in demand. Because of frosts in California this year roses crops decreased dramatically- just like after a hurricane in Connecticut this caused a decrease in supply of apples. Supply for roses was cut what caused an increase in price and a decrease quantity demanded.
In this situation, opposite to the ones that we talk about during class, those two changes happen in the same time. The roses market is much more complex than a graph with 2, 3 or 4 lines, but we can illustrate it using them what makes it easier to see why suddenly the price for roses doubles.
It happens because of a increase in demand and decrease in supply, which both contribute to this unusual jump of the prices.
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2 comments:
Hey wojtek! Great post... really interesting that you found something on roses for Valentine's day... ever think that we celebrate love on "VD" ? Anyway. This quote got me: "Supply for roses was cut what caused an increase in price and a decrease quantity demanded." Would the quantity demanded really go down? Wouldn't it be supply or quantity supplied?
Excellent analysis, Wojtek! You have it right on the head - just like those silly apples in the examples in class.
Yes - supply was decreased, causing price to increase, changing QD to a lower point. Exactly right. :)
Nice to have it on Valentine's Day, too. Is it an international holiday? I have no clue...
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