Tuesday, September 15, 2009

Economics at work, Festival edition

One of the biggest festivals in the Hindu calendar is approaching and people are excited for family reunion and celebration. This comes up with the tendency by each household to build up stock of goods and services, thus drastically driving up demand for essential goods while supply being more or less constant for some period (until the adjustment occurs). However, before the adjustment occurs, the drastic rise in demand jacks up prices so high that it seems that the goods market is punched hard by sudden inflation hurricane. This is where we need a government food stocking and distribution agencies to smooth out supply of such goods and services.

Anyway, here is a story about increase in price of goats (not uncommon though):

With just days to go before Nepal's biggest religious festival of the year, the capital Kathmandu is suffering a severe shortage of goats for ritual sacrifice, the government said Tuesday.

As a result, the government food agency has ordered officials to travel to the countryside and buy up goats to be brought into the capital, where they will be sold for slaughter to mark the main Hindu festival of Dashain.

... the price of the animals had risen by around 25 percent in the capital as the festival approached, and the government was hoping to bring in around 6,000 of them

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