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=Marketplace: The Trouble with Truffles=



INTRODUCTION
Market prices vary depending on many factors. When goods and services become relatively more scarce, market prices increase. This increase affects buyers and sellers. Buyers must decide if the good or service is worth the increased price, and sellers must decide if they can make a profit by selling the good or service at an increased price. In this lesson you will learn how consumer demand for the delicacy known as a truffle drives entrepreneurs to invest resources in producing them. You will also learn of the darker side of the truffle market. Unmet demand has lead to an influx of inferior truffles from Chinese producers attempted at being fraudlently passed off has the real thing.

TASK
In this lesson, you will watch a 60 minutes report entitled 'The Trouble With Truffles.'[|http://www.cbsnews.com/8301-18560_162-57353188/the-trouble-with-truffles/]

PROCESS Watch the 60 Minutes Report.

KNOW WHAT THE FOLLOWING MEAN:

1. Scarcity of Truffles

2. Price of Truffles

3. Buyers and Sellers of Truffles

Why are truffles so valuable ___.
 * Questions:**

a) Consumer preferences

b) Abundance

c) Shortage

d) Chinese Substitutes 2) What contributes to the scarcity of truffles?

a) Truffles can't be produced in laboratories

b) Lack of a reliable technique for cultivation

c) Exactly where and why truffles grow is impossible to predict

d) All of the above 3) What is the incentive to a producer to use the Chinese truffles but not explicitly label their product as such?

a) Increase their sales in China

b) Decrease their sales in China

c) Sell Truffles at a lower price than they otherwise would

d) Sell Truffles at a higher price than they otherwise would Question 4: What is the price per pound of black truffles? Question 5: If truffles could be mass-produced in a laboratory, what do you think would happen to their price?

Question 6: Why do some restaurant owners continue to use truffles despite the increased cost and risk? What does the increased cost and risk do to their profits?


 * Activity 2:**

You have listened to a news story discussing scarcity and its effects on buyers and sellers. One of the restaurant owners is faced with a decision regarding whether or not they will continue to sell truffles.



You are a restaurant owner and must decide how to deal with the increase costs (related to securing and insuring) truffles. Consider the following: **USE YOUR OWN WORDS...DO NOT COPY AND PASTE OR YOU WILL RECEIVE NO CREDIT.**

1. Will you continue to sell truffles at the current price, or raise your prices?

2. What are the benefits of keeping your prices the same for the season even though you are spending more money to secure your supply of truffles? How would keeping prices the same affect your profit?

3. What might happen if you raise your prices to compensate for the higher cost of selling truffles? Could this affect your profit?

4. What are the possible effects of removing truffles completely from your menu?

CONCLUSION
In a concluding paragraph, Identify at least three main effects that scarcity has on buyers and sellers. How does scarcity directly affects profit in the marketplace?