Question

Peanut crops have been destroyed by a fungus. Consumers are substituting almond butter for peanut butter because they perceive it to be a healthier option. The prices of both peanut butter and almond butter are rising. Why

Answer 1

The prices of both peanut butter and almond butter are rising because of the demand and supply forces.

What is Demand and supply?

Demand and supply forces are the deriving forces of the market which influence the prices of the commodities. Demand refers to the willingness and ability to purchase the commodity.  

Supply refers to the availability of the product and services in the market that to as per the requirement in the market. Thus both the terms are interrelated and interconnected to each other.

As per the above situation, the rise in the demand of the peanut butter is due the loss of the crop due to fungus with created shortage in the supply of the peanut in the market.

Thus people shifted to its substitute almond butter which rises the demand of the almond butter as well.

Therefore it increased the prices of the  both the kinds of the butter available in the market.

Learn more about Demand and supply here:

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