How Will Peanut Price Hike Impact Related Items?

General equilibrium ain’t just peanuts. With the tremendous shortfall in the peanut harvest (a decline of 17%) due to the unusually dry weather in peanut-growing states, people are expecting a rise in the price of this main input of peanut butter to cause supply to shift leftward. Jif peanut butter expects to raise its price by 30% starting in November.

I doubt that its sales will go down much—I think the demand for peanut butter is fairly inelastic. But what about related markets? If everyone likes peanut butter and mayonnaise sandwiches as much as I do—if peanut butter and mayonnaise are complements—then we’ll see a leftward shift in demand for mayonnaise, and its price will decline. Have I held too much of the ceteris paribus, or not enough? Where should one stop?

Sperm Bank Rejecting Redheads

A recent story in the NY Daily News reported that Cryos International, one of the world's largest sperm banks, is refusing to accept donations from redheaded men.

Apparently, this is a result of a sharp increase in supply that the company needs to reduce before more donations are accepted. Like most temporary surpluses, this one will be removed, in this case probably not by the price system (although one can imagine that potential recipients, hearing of the surplus and being indifferent about their donor’s hair color, might offer Cryos a below-market price).

More likely, Cryos’ refusal to accept any more supply will cause the surplus to disappear, so that redheads’ donations will soon be accepted again.

Paris Under Siege: Why Were Cats Four Times the Price of Dogs?

In his discussion of the Siege of Paris 1870-71, David McCullough in The Greater Journey discusses the path of meat prices. One observer “considered cats ‘downright good eating,’ as apparently did many people. The price of a cat on the market was four times that of a dog.” Whether the price difference was really based on demand—differences in tastes for the two kinds of meat—or supply—is not mentioned in the book, but perhaps Parisians protected Fido less well than they protected Fluffy.

This illustrates a ubiquitous problem in discussing price differences: It’s easy to adduce a cause on one side of the market, but just as easy to bring up another cause on the other side of the market. I would bet on demand in this case, though, since it’s easier to protect Fido than a loose-running cat.

A Biblical Post

Photo: David Campbell 2 Kings VII discusses an incident in which the people of Israel are besieged and food prices are skyrocketing. A military officer scoffs when “a man of God” predicts that barley will soon sell for ½ shekel and fine flour for 1 shekel (very low prices). The officer is shortly trampled to […]

Why Is the German Economy Cranking?

What's behind Germany's economic success? It's not a wirtschaftswunder; The Economist explains.

An E.R. Doc Learns the Economics of Street Drugs

An E.R. doctor in the Pacific Northwest who writes a blog called "Movin' Meat" might seem an unlikely candidate to know the economics of street drugs. But since he treats overdoses, he's learned a bit.

What's in a Name?

The determinants of one's demand for a product are covered in every introductory economics course. Independent of prices, my income and my general preferences, I also consider the cuteness of the product's name.

Gold's Magic Price

We've had some old unwanted gold jewelry lying around for a long time. With gold at $1,237 per ounce, we figured it was time to sell it. We are a living movement up the supply curve of gold.

Separating Markets

My son is renting a car in December. He'll drive it for two days in Orlando, then he'll drive to South Florida for an eight-day stay. With the drop-off charge, the price is $900. But if he drops the car off in South Florida when he arrives and rents a new one from the same company, the total price is only $500. He values his time spent dropping off the car at less than $400, so he'll do it.

When a Changing Labor Market Changes Business

There are innumerable great examples of goods in related markets. And of complements and substitutes. (One of my favorites is the local store that sold rock music and condoms, clearly complements.) It's harder to cook up neat examples of goods markets that are impinged upon by labor-market changes.