Agricultural Economics Department


Date of this Version



Cornhusker Economics (December 2011)


Published by University of Nebraska–Lincoln Extension, Institute of Agriculture & Natural Resources, Department of Agricultural Economics. Copyright © [2011] Board of Regents, University of Nebraska.


Some of us, and I confess I am in this group, can remember when our mother would make us a birthday cake. She used basic ingredients or commodities like flour, sugar, eggs and cocoa to create it from scratch. It was always a wonderful creation and quite affordable – probably under 50 cents for the entire cake. Then a few years later it seemed fashionable to use cake mixes and canned frostings. Betty Crocker, Duncan Hines and others figured out that they could take the commodities and package them in such a way as to make a consumer good. It saved time and energy and people were willing to pay for the convenience.

Fast forward a few years and buying a cake mix was not quite good enough. We are now willing to go to a bakery or grocery store and purchase a birthday cake. We buy not only the cake, but the service of having the cake already completed and ready to use. Correspondingly the price goes up, but this is not a huge issue, because we were again saving personal time and energy.