Inferior Good: Diminishing Marginal Stupidity in Action

Wednesday, October 04, 2006

Nooooooooooo!

The title of this post is taken from the title of a friend’s recent email to me, which carried a link to a CNN article bearing this ominous title: Beer drinkers beware: 4 percent of U.S. hops crop burns.

According to the article, the US produces about 24 percent of the world’s hops. So I suppose then that about 1 percent of global hops production went up in flames.

Is a 1 percent decrease in hops supply significant enough to increase prices in any meaningful way (what is the price elasticity of demand)? Will this have a significantly larger effect in North America than elsewhere (are transportation costs significant)? Were the destroyed hops some sort of standard product, or were they specialty hops? We shall see. Keep your fingers crossed.

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