Every December, one toy seems to be all anyone wants. Shops sell out fast, and sometimes the price creeps up. A few months later, the same toy might be on the sale shelf, much cheaper. Why does this happen?
Two words: demand and supply
| Word | Meaning |
|---|---|
| Demand | How much people want to buy something |
| Supply | How much of something is available to buy |
When lots of people want a toy (high demand) but shops only have a few left (low supply), the toy becomes hard to get — and its price often goes up. When hardly anyone wants a toy any more (low demand) but shops still have plenty left (high supply), shops often lower the price to encourage people to buy it.
A lemonade stand on a hot day
Imagine you run a lemonade stand. On a boiling hot day, everyone walking past is thirsty — demand is high. If you only have a few cups left (low supply), you could charge a bit more and people would still buy it. On a cold, rainy day, hardly anyone wants cold lemonade — demand is low — so even if you have plenty left, you might have to lower the price just to sell any at all.
Put these Christmas-toy events in the order they usually happen:
- An exciting new toy is advertised on TV
- Lots of children want it for Christmas — demand shoots up
- Shops run low on stock — supply gets scarce
- The price rises, and it sells out fast
It works both ways
The same idea explains sales: after Christmas, demand for that toy usually drops a lot, but shops may still have boxes left over. To clear the shelves, they lower the price — that is why you often see "half price" signs in January!