Thanksgiving is a great US 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 (see examples here or here).
And this happens every holiday season: the price falls just before Thanksgiving and stays low until Christmas. For example, November 2014’s price per pound for turkey was almost 20% lower than the price the previous March.
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.
