Out of toilet paper? ...Again!

The wholesaler company, Costco, started limiting the number of bundled toilet paper-rolls each membership cardholder could buy per visit recently, in late September 2021. The last time it did this was at the beginning of the pandemic back in March 2020 to prevent panic-buying by customers. This time, however, the key reason is due to supply chain challenges that include shipping delays and shortages of truck drivers to bring highly demanded goods like toilet paper to the warehouses. The federal government has also stepped in to have the ports on the West coast to work around the clock as shipping costs from China to these ports increase from $3,000 in October 2020 to $20,000 in September 2021! The hope is to improve the delivery logistics of goods from the ports to the store shelves.

Questions/Discussions

Based on the elasticity concept, is the toilet paper currently an elastic good or an inelastic good? Do explain your choice.
What do you think is the effect on the Aggregate Demand, AD curve due to this nationwide shortage?:
- A movement on the AD curve – which direction? Do explain the movement OR
- A shift of the AD curve – which direction?
  Which component(s) affected this shift – C, I, G, X or M? Do explain.
For the Aggregate Supply, AS curve, do you think the current supply chain gridlock would impact the Short Run Supply Curve or the Long Run Supply Curve? Do explain your choice.
Self-reflection: List 3 items that you use in your daily live that you believe are price inelastic. Explain your choice. Can any of the items identified move over to become price elastic with time, say post-pandemic? Why or why not?

Chicken Little is an Increasingly Rare Bird