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Lower supply means higher prices: Avocados edition

Avocado fruitnfoliage
A story on NPR caught my ear the other night - it was about how San Diego used to be the country's top supplier of avocados but producers here are facing increased costs for water and labor, and increased competition from other countries. What really caught my attention was the very end of the story:
"Ironically, 2011 was the best year ever for San Diego avocado growers. High market prices pushed the monetary value of the crop up, even as the acreage shrank."
This isn't as bad as some examples I've seen but to some, it could sound like the speaker is suggesting that the higher prices are somehow surprising or inconsistent with acreage shrinking. This would be a great example to have students show, using a supply and demand graph, how the higher prices are exactly what we should expect, because of the shrinking supply.
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  1. John CareyFebruary 16, 2012 at 7:31 AM

    So I guess principles of economics is not a prerequisite for working at NPR...or for any other media outlet it seems.

    ReplyDelete

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