Ammo SHortage in the United States
Guns are popular in the US. Thus, their complementary goods, ammo, also have
a high demand. However, a recent shortage in raw materials caused by the Covid-19
pandemic have caused the price of ammo to skyrocket. Ammo is a luxury good; it has a
high PED and YED. However, ammo becomes a necessity to certain people who need it
for either protection or a job (e.g gun range workers, policemen, farmers) causing the
demand to become less elastic. Due to the Covid-19 pandemic, shipping raw materials
to America in order to create ammo has become much more difficult, causing a
shortage. This shortage forces people to make choices on how and when they use
ammo.
Graph 1:
Graph 1 shows that before the pandemic, the shortage in ammo was a while the
consumer surplus was c+d. The pandemic and the shortage in materials which
accompanied it drove back the maximum possible supply, shifting the supply curve from
S to S1. This shift in the supply curve exacerbated the shortage from a to a+b and also
decreased consumer surplus from c+d to c. This means that ammos is now more
expensive. However, despite ammo being a luxury good for most people, the demand
for ammo actually increased as the shortage created a sense of urgency to buy ammo,
leading us to graph 2.
Graph 2:
Graph 2 takes into account the increase in demand for ammo due to the
shortage. We can see that the shortage has once again worsened from a to a+c while
the consumer surplus has changed from f+d to f+g with no obvious addition or
subtraction. Thus, we can see that the rise in demand, and by extension, price, actually
increases how much consumers are willing to pay for ammo. In addition, the producer
surplus is increased from b to b+d+e as the increased demand allows firms to charge
more without changing their bottom line. As the shortage and increase in demand
allows firms to charge more, increasing ammo prices, consumers are forced to make
choices.
Firstly, consumers have to choose whether or not to buy ammo, and if they buy,
how much to buy. As weapons and ammo are a luxury good, those who only own a gun
for self defense will greatly reduce their spending on ammo as they do not have a need
to repeatedly replace their used ammo. However, more invested gun hobbyists may
actually choose to buy more during the shortage in order to have ammo saved up for so
that they can practice their hobby in case the shortage exacerbates and ammo prices
shoot up even further or ammo becomes unavailable. Meanwhile, less invested gun
enthusiasts may choose to simply temporarily give up the hobby until the prices go back
down as the hobby simply is not important enough to them. Lastly, hunters may choose
to switch to bow hunting or to put off hunting until prices go back down.
In addition to forcing people to make choices on purchases, the ammo shortage
also forces people to reconsider their purchases of guns, a complementary good to
ammo. Due to the high ammo prices, people who are looking to buy a new gun may
choose to simply put off the purchase as there is no point to a weapon you cannot afford
to shoot. This is especially true for those who already own many weapons as the
marginal private benefit of a weapon goes down when someone already has many
weapons. In addition, people may choose weapons which are not as ammo guzzling,
opting for guns which fire more slowly in order to conserve ammo while still getting the
maximum enjoyment out of shooting their weapon. Lastly, people may choose to buy
weapons which use less common calibers over those who use common calibers like the
9mm as those bullets are more likely to experience a sharper climb in price due to the
higher demand.
While ammo may be a luxury good to most, it is much more necessary to some
people as certain professions and businesses require ammo to function properly and
the new prices will force them to make harder choices. The owner of a gun business
such as a gun range or club would have to either make customers bring their own
ammo, change the price of the ammo provided, or simply close down until ammo prices
drop back down in order to stay afloat. In addition, farmers and those who live in rural
areas may have to opt for different forms of pest control as simply shooting the animals
which bother livestock/people has become much more expensive.
In conclusion, the ammo shortage in the US has driven up the demand for ammo
while the supply dropped, leading to a spike in prices. These new prices force
hobbyists, business owners, and professionals to make choices on their policy and gun
usage.