The Price Point

As Stuyvesant students prepare to enter the outside world, understanding the economy becomes an essential skill. In today’s society, knowledge of economics provides us a foundation for navigating financial decisions, understanding the effects of public policy on the market, and making informed decisions about our own personal finances.

Supply Chain of Halloween Candy

Raw Materials: Before the candy is made, the ingredients need to be obtained. Raw ingredients such as cane sugar are sourced from agricultural producers.

Manufacturing: Once the candy manufacturers obtain all the ingredients, the candy-making can begin. Candy is mass-produced in large factories, where machinery and workers both play a part in making the product.

Packaging: Once the candy is done, it’s sent off to the packaging facility. Here, brands can add some decoration to the candy, including logos and Halloween artwork.

Distribution: The candy is then sent to wholesalers and distributors—they typically buy large quantities of a product and sell them to retailers—who transport the candy to many different places by plane, ship, or truck.

Retail: These distributors supply the candy to retailers, such as grocery stores, convenience stores, and your favorite candy shops.

Sale: Now, consumers, like you, can buy the candy to eat or give to trick-or-treaters.

After: Post-Halloween, the leftovers are often sold at discounted prices in order to clear excesses of candy. Sales and discounts also stimulate the economy by creating a sense of urgency for consumers and lead to increased spending

How Halloween Affects the Market

Halloween’s impacts on the market—positive or negative—are difficult to fully evaluate. Consumers are expected to spend a record $12.2 billion on Halloween candy and decorations. In theory, a flurry of spending helps jumpstart economic growth. However, it is entirely possible that these positive impacts are offset by consumers anticipating the increase in spending and therefore spending less in the preceding weeks. Regardless of whether it’s beneficial, Halloween is a major American economic event that provides value to multiple industries.

Supply Chain Impacts Corporate Decision Making 

Candy companies have begun to switch to producing and selling cheaper gummies, as opposed to chocolate, due to the high cost of cacao. This trend also has roots in disappointing sales numbers from last spring’s season for major American chocolate makers including The Hershey Company. Chocolate prices are consistently outpacing inflation—a trend that will likely continue as companies de-emphasize chocolate and cacao prices fail to drop. 

Economic Concept of the Issue

Supply and Demand (with Halloween Candy):

Supply and demand is a fundamental concept in economics that explains how prices of goods and services are affected by two main components: supply and demand. Think of demand as a function that relates the quantity of a good/service that consumers are willing and able to purchase to the price of the good. It describes how much consumers “demand” that good, depending on its price—the cost of obtaining that good. On the other hand, supply is a similar function, except we look at the quantity of a good or service that producers are willing and able to supply, given various prices. Supply and demand are closely intertwined with each other, as both influence the market price of certain goods. For example, during Halloween, demand for candy increases, meaning more people will be willing to purchase candy for trick-or-treating even if the price is higher. As a result, suppliers will have to sell more candy to prevent a shortage, but to sell more candy, suppliers will want to set a higher price per unit. On the other hand, if demand for candy is lower, fewer people will be willing to purchase candy even if the price is the same compared to Halloween, so to prevent a surplus of candy, suppliers will have to sell or produce less and charge less per unit.