Roses are more expensive on Valentine's Day than at other times of the year, yet sales of roses are highest on that day. How does economic theory account for this?
A) An increase in demand pushes up the market clearing price of roses.
B) People buying the roses are irrational.
C) Roses are not subject to the law of demand.
D) Florists know that there are no substitutes for roses, so they take advantage of consumers on Valentine's Day.

Question

Quizplus · Accepted Answer

According to the law of demand, an increase in demand leads to an increase in price. As people want to buy more roses on Valentine's Day, there is an increase in demand. This increase in demand pushes up the market clearing price of roses, making them more expensive than at other times of the year. Despite the higher price, people are still willing to buy roses on Valentine's Day, as they want to show their love and affection.

Roses Are More Expensive on Valentine's Day Than at Other