Price Elasticity of Supply

A Lego brick is a precision injection molded piece of plastic, accurate to two thousandths of a millimeter. The factory that makes them, in Billand Denmark, runs continuously and stamps roughly 1140 bricks per second. That works out to 36 billion bricks every year. The mold is a hardened steel block that can take 18 months to design, machine and validate before its first brick comes out clean. This is what makes the Lego supply curve so interesting. In the very short run, if a particular Star Wars set sells out in November, the company cannot do much about it. Existing molds are pinned to existing production schedules. Adding a new mold to the line takes more than a year. If demand spikes overnight, supply simply cannot. Across longer timeframes, the picture changes completely.