US High School Economics class: Dubai chocolate sparks pistachio shortage as TikTokers go nuts

This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.

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Supply and demand are the key forces that drive prices and production in a market economy. In this lesson, you’ll explore how shifts in consumer preferences and supply shortages can impact prices and quantities. You’ll analyse a real-world example where a viral pistachio chocolate bar from Dubai caused a surge in pistachio demand, leading to a global shortage, rising prices, and major changes in the chocolate market

Essential Question: How do changes in consumer preferences and supply conditions affect prices, shortages and business decisions in a market economy?

Read the FT article and then answer the questions below:

Dubai chocolate sparks pistachio shortage as TikTokers go nuts

Reading Questions: 

• What role did social media play in changing the demand for pistachios?

• How much have pistachio kernel prices increased in the last year?

• What are some consequences of this rapid price increase for consumers?

• How did last year’s pistachio harvest contribute to today’s shortage?

• What impact has the Dubai chocolate trend had on international trade?

• How are US farmers adjusting to changing nut market prices?

• What is one challenge producers face in meeting the new demand for pistachio chocolate?

• How is FIX using scarcity as a marketing strategy, and what are the potential benefits and risks of this approach?

• How might the high price of pistachio chocolate bars have influenced other chocolatiers’ decisions to enter the market, and what does this suggest about how businesses respond to profit opportunities?

Part Two

Watch this video on supply and demand by Jacob Clifford (7:50), then apply the concepts you learned by answering the following questions based on the Financial Times article 

• Which determinant of demand explains why the demand for pistachios surged after the Dubai chocolate went viral?

• Did this change in pistachio demand represent a movement along the curve (a change in quantity demanded) or a shift (change in demand)? Why?

• Apply the law of diminishing marginal utility to explain why consumers may be less willing to keep buying pistachio chocolate at higher prices as their consumption increases

• How did the supply curve for pistachios shift, and what was the result in the market?

• What might motivate chocolate companies to enter the pistachio product market, despite high input and production costs?

• Applying the principles of elasticity, why are producers struggling to meet the high demand for Dubai chocolate even months after the trend began?

• If a new trend made hazelnut chocolate go viral instead, what effect would that have on pistachio demand?

• What would eventually happen to pistachio prices if more farmers planted pistachio trees and harvests improved?

Joel Miller and James Redelsheimer, Foundation for Economic Education.
Click here for FEE FT Classroom Edition with classroom-ready presentations and suggested answers for teachers.