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The humble egg has struck the nerves of the United States. Prices have more than duplicated during the past year, at about $ 7.75 per dozen. The most obvious reason for this is the propagation of avian influenza, which has affected more than 50 mn of chickens since November, equivalent to one in seven of the country’s herd of egg stalls, according to the numbers of the Agriculture of the United States.
There is also another reason: not scarcity but elasticity, or the lack of it. Eggs often appear in economics classes as an example of goods that are inelastic. In other words, a great increase in the price does not create an equally large decrease in demand. Some studies have determined that in theory, if egg prices increase by 1 percent, Demand falls into just 0.27 percent.
That compares. Eggs are not really like other types of food. They are an essential part of the American Brunch. As the protein sources go, they are relatively cheap. Cocoa is Another inelastic food that has skyrocketed in price In recent months. The bad harvests in Western Africa are a factor in what promises to be an expensive Valentine’s Day.
Inelasticity has also become an investment trend. Think of Nvidia, the chips manufacturer whose silicon drives the rise of artificial intelligence. While the supply of chips is increasing, the demand among Silicon Valley customers is increasing faster, at the levels, Chief Jensen Huang describes as “crazy”, with the price as a late occurrence. That is reflected in the huge margin of nvidia monopoly profits and, in turn, in the almost doubt of its actions in a year.
Some articles enjoy low elasticity for reasons more difficult to identify. Netflix accounts are an example. The digital transmission company managed to reduce the traditional laws of supply and demand by increasing prices several times, apparently without impact on the viewer’s appetite. Walt Disney has been less lucky by increasing the prices of its Disney+offer: subscriber numbers fell by 700,000 in the last quarter.
Some researchers argue that inelasticity is becoming a characteristic of the stock market. A possible culprit is the emergence of passive investors as indices trackers. These take customer money and buy shares, regardless of their price. Finance professor Valentin Haddad suggests that other investors have not counteracted that impact effectively, and that The actions have become 11 percent less elastic As a result of passive investment. A wave of retired boomers could, of course, cause that trend to reach the reverse.
Back in the real world, Eggflation will eventually decrease. Farmers continue to plot new chickens, although they take several months to reach maturity, and the flu still stalks the flock. The states as Nevada can relax the restrictions on the eggs of the caged chickens, happily for buyers, if not the birds. For now, inelasticity remains in the menu, and is better served with one side of patience.