Thanksgiving is a great U.S. holiday during which people consume huge quantities of turkey, stuffing, cranberry sauce and pie.
One of the stranger things about this holiday, however, is that a few days before everyone starts cooking, whole turkeys are suddenly discounted by supermarkets and grocery stores.
And this happens every holiday season: The price falls just before Thanksgiving and stays low until Christmas. For example, in the average year, November’s price per pound for turkey is about 10 percent lower than the price in September.
Why does the price come down at the one time of the year when demand for the product spikes the most – before a holiday that’s literally dubbed “Turkey Day”?
The turkey demand curve
Most people expect turkey prices to rise because many more people are buying the birds. My family is an example of this buying phenomenon, since we almost never eat turkey except at Thanksgiving.
In general, when there is a fixed quantity of something to sell and demand for the product spikes, prices rise. This is why a dozen long-stem red roses typically cost a lot more on Valentine’s Day than at other times of the year.
In more formal economic language, the demand curve for turkeys shifts outward at Thanksgiving, which means people at this time of year are interested in buying more of these birds regardless of the price. Even the most casual shopper in food stores this week can observe this increase or shift in demand as more people are buying turkeys to cook.
However, each Thanksgiving the price of turkeys doesn’t rise. Instead, it falls during the holiday period as many stores advertise special low turkey prices, and over time turkey prices have generally fallen.