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But if the supply went down, presumably they have fewer eggs to sell or higher costs thus making less profit, right? But since they are making record profit, th
by stinkytaco 4y ago
But if the supply went down, presumably they have fewer eggs to sell or higher costs thus making less profit, right? But since they are making record profit, that seems to imply that the rise in prices is not tracking directly with the drop in supply, but that someone in the chain is artificially raising prices to profit off the perceived lack of supply.
- HDThoreaun 4y agoIt’s about elasticity of supply versus demand. If the supply shock reduces supply by 10% and prices increase by 11% then revenue would be unchanged. But if consumers don’t substitute in the face of that 11% increase then prices will continue to climb, increasing profits to more than they were before the shock.
- margalabargala 4y agoOne company had increased profits, not the industry at large. That one company happened to be one that invested a bunch of effort in preventing bird flu from infecting their flocks. The article is low on specifics. This company may be "the largest" but how big is that? They could still be less than 5% of the market. If sufficient other farms had high levels of chicken death due to bird flu, it makes sense that the farms that did not would do well, while still tightly constraining supply.