Jingle All The Way: Elasticity of TurboMan

Howard (Arnold Schwarzenegger) tries to get a coveted TurboMan action figure doll the day before Christmas. It’s only the hottest selling toy of the season, so everyone is in a rush to grab this item. Because prices aren’t (initially) adjusting in their usual way, a shortage occurs across the entire city.

A limited shipment of Turbo Man action figures does arrive at one store, which decides to allocate the doll through a lottery system. Whenever there are shortages in markets, there may be a misallocation of consumption, particularly when items are distributed randomly rather than to the consumers with the highest willingness to pay. Even the though the price of the doll increases by 100%, there doesn’t appear to be any change in the quantity that people want to purchase. This would imply that the demand for TurboMan action figures is very inelastic.

Leave a Reply

Up ↑

%d bloggers like this: