A great example of supply-and-demand in action: What would happen in the market for eggs if a disease wiped out a huge chunk of the laying-hen population?
Avian flu, which has proven lethal in other parts of the world, has spread throughout the United States like wildfire. Since April, when cases began spreading by the thousands each week, the virus has escalated to a point of national crisis.
As of this month, some 46 million chickens and turkeys have been affected, according to the U.S. Department of Agriculture. Nearly 80 percent of those are egg-laying hens, a reality that has been crippling for the egg industry.
But it's becoming increasingly clear that it isn't merely those who produce eggs that will suffer. Those who eat them will pay a price, too.
The wholesale price of eggs sold in liquid form (a.k.a. egg beaters, the kind used by large food manufacturers) has skyrocketed — from $0.63 per dozen to more than $1.50 — since the virus began to spread. While that stands to affect the price of breads, pastas, cakes and other commercial confections made with eggs, it also bodes poorly for food service providers, such as McDonald's, which sell millions of egg-filled meals every morning. Texas-based fast-food chain Whataburger recently announced that it will be shortening its breakfast hours for the foreseeable future.
- The disease shifted the supply curve of eggs to the left
- causing a shortage of eggs at the old prices [see the original story for examples!]
- leading buyers to offer and sellers to ask higher prices
- with a resultant increase in the equilibrium price of eggs