What really affects the cost for roses during Valentine's Day?

timer Asked: Oct 8th, 2015

Question description

A day of love, romance, and of course, the market process. Why are rose prices so high on Valentine’s Day? Ask the lovers-the consumers-they say the florists. Ask the florists, and they will say it’s the wholesalers. Ask the wholesalers, and they will say it’s the growers. Ask the growers, and they say it’s the costs.

Valentine’s Day is the most popular rose day of all, more than 60% of the roses Americans buy during the year are bought for three days: Valentine’s Day, Mother’s Day and Christmas.

Valentine’s Day is by far the most popular, accounting for 1/3 of all a rose grower’s annual sales. This is almost 130 million roses for one day. Roses can’t be cranked out like hamburgers or oil changes. Roses require time, care, warmth and sunlight. According to Roses Incorporated, commercial rose growers in the U.S. operate nearly 900 acres of greenhouse areas at a capital investment of about $1 million per acre.

  1. The gigantic demand for roses creates a gigantic demand for what types of resources?
  2. Given these resources are not free, they cost the grower, how are producers able to recoup these costs?
  3. How would you categorize the market for roses, (perfect competition, monopolistic competition, oligopoly or a monopoly?) Justify your answer.

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