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In: Economics

Sales of Valentine's Day roses are expected to be down this year, but prices will still...

Sales of Valentine's Day roses are expected to be down this year, but prices will still go up because the plants are producing fewer blooms.Vendors at Sirikorn flower market in Muang district said there is less interest in ordering fresh roses for Feb 14 this year.Young people seemed more interested in sending digital flowers to their loved ones.The owner of Doi Florist shop said supplies of roses were down because weather conditions had affected the harvest. The plants were bearing fewer flowers.This caused the price of a bouquet of roses to sharply increase.
A bouquet of small roses which previously sold for 200-300 baht would cost 300-400 baht this year, she said.Kapkaew Donnate, owner of Tuta Florist shop, said young people were traditionally the main customers for Valentine’s Day, but now they tended to send digital flowers and buy other gifts instead of fresh roses.She also confirmed that prices of roses had doubled because of the low supply, and blamed the unfavourable weather.
“Vendors here buy flowers from several gardens in Chiang Rai and Chiang Mai provinces. Our shop orders flowers from gardens in Thoeng district in Chiang Rai."Bouquets of roses, each with 25 blooms, are currently priced at 200 baht each. The retail price of single rose is 20 baht, but only grade B and C roses are available at the market.
"For Valentine’s Day, grade A roses are expected to be available at the market, but the price will be 40 baht a rose,’’ Ms Kapkaew said.
Use the supply and demand model, including diagrams, to explain the impact on the prices and quantities in the market of roses in Muang district of:Valentine’s Day,the weather, and young people ‘going digital

Solutions

Expert Solution

The given excerpt indicates that demand for roses traditionally increases on Valentine's Day. However, with taste of young people changing as they seems to prefer sending digital flowers to their loved ones or are interested in buying other gifts than fresh flowers, demand for roses at this year's Valentine Day is bound to decrease. This will shift the demand curve for roses to the left.

Moreover, adverse weather conditions has also resulted in lower production of roses. This has resulted in a decrease in supply of roses as well.

This will shift the suppy curve of roses to the left as well.

However, it is indicated that, even though, demand is decreasing, price of roses tends to increase.

This is because, even though, demand is decreasing, supply is also decreasing and that also in greater magnitude than the decrease in demand.

So, greater decrease in supply relative to demand is resulting in a rise in price of roses and fall in quantity traded of roses in the market for orses in Muang district.

Following is the required diagram -


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