1

HL Economics/ Period 2

IB Economics Internal Basement Commentary: Microeconomics

Thanksgiving is a holiday practiced primarily in Canada and the United States to
celebrate the harvest in which people have turkey due to the fact in is a native animal of the
Americas. Recently the bird flu has got to many turkey farms causing many of the farms to lower
their turkey supply and discouraged other farmers to raise as many turkeys due to the turkey
scare. Because of the sudden decrease in turkey supply this will lead into a higher prices. Supply
shock occurs when there is an event that suddenly causes a sudden increase or decrease in supply
or demand.
However in this case this supply shock will cause the supply to decrease. According to
this article the supply shock will heavily affect thanksgiving due to the fact turkey is a traditional
food eaten which will lead to much higher prices as well as the low supply of turkey already. The
article also concluded this recent bird flu scare discouraged many farmers from producing as
high as the demand. This supply shortage could lead to consumers forcing themselves to
substitute with chicken.
Figure 1: Shortage in Turkey Supply
P2
S1
P1
S2

Q1

Q2

Balthazar 2
In the figure 1: The shortage of turkey supply, P is the set price made by turkey farmers. The
mid-western turkey farmers predicted that in which the market size (Consumers who were
planning to purchase turkeys this season) is shown at the D1 curve at Q1 what the price was set
at P. In order for the turkey farmers to be able to meet the demands that would have been in
favor/ ideal of Q1, S1 represents the amount of turkeys supplied by the farmers. However,
although ideal it is not realistic due to the fact the shortage had took place that negatively
affected the American turkey market. The caused a rightward shift in the demand curve from D1
to D2 and following as a result Q1 to Q2. Due to the fact this supply shock that came from the
bird flu they heavily affected the holiday season that turkey it primarily bought ensuing an
increase in demand, Turkey farmers do not even have the choice to allocate more resources to
meet the demand due to the fact the amount of time it takes to raise a turkey. This is appointed
and shown by the rightward shift of the supply curve from S1 to S2. In order for turkey farmer to
be able to allocate the resources (turkeys) to build their supply up there would have to be wait for
the bird flu to pass so there will not be any more excess loss.

Figure 2: Turkey Shortage

S
P1

P2

Shortage

P3

D
Q1

Q2

Q3

Balthazar 3
Turkeys prices during the shortage will increase, which is shown at P3. However they predict the
amount of turkeys will be at Q3 turkeys. With the price increase however consumers will be
forced to make decisions resulting in paying at P3 or substituting for something like chicken.
Consumers rather pay the prices at P1 but due to this shortage and supply shock they will be
forced to buy at prices they would not had not intended on buying. The only way equilibrium
will be cleared by paying at P2.
In conclusion this shortage will result in consumers either choosing to purchase the
higher price of Turkey due to the fact its quantity is limited. Consumers will be forced to find
other substitute goods like chicken. Smaller organic farms could possible benefit to this shortage
due to the fact they are most likely not exposed to the bird flu and so consumers will not have to
worry about contamination. In order for the quantity to increase and be able to to keep up
demand turkey farmers will need to wait till they will have to wait until next season for next
holidays in order for the turkeys to be ready for mass consumptions.