As autumn moves into winter, cold and flu season is moving into full swing. Combined with an uptick in other respiratory illnesses, more consumers are heading to the drugstore to buy cold medicine. Unfortunately, many are getting to the store only to be confronted with empty shelves. Pharmacy owners blame the shortages on the inability of supply to keep up with the increased demand. Like many goods in the economy, cold medicine has also run into supply chain issues. Some owners report having to wait for several months or more to have their orders filled.
To address the shortage, some are suggesting the use of alternatives to cold medicine, such as hot steam showers to reduce congestion and recommending people drink more water to help alleviate symptoms. However, they are warning consumers against other alternative strategies such as buying on the secondary market and stockpiling supplies when they do find them. In addition to health and safety concerns, employing such strategies can actually exacerbate the shortage, in which case we might expect to see future shortages on things like tissues and chicken noodle soup.
Discussion Questions:
- Explain how secondary markets and stockpiling affect the shortage.
- Use a supply and demand model to show how the equilibrium price and quantity change when there is a simultaneous increase in demand and decrease in supply.
- Do you expect the elasticity of supply for cold medicine to be elastic or inelastic? Why?
Sources| The Star: https://www.thestar.com/news/canada/2022/11/30/heres-why-you-possibly-cant-find-cold-and-flu-medicine-and-what-to-do-now.html; Unsplash: https://unsplash.com/photos/RmByg5kFfQg