Question

The demand for grapes is highest during summer and lowest during winter. Yet grape prices are normally lower in summer than in winter. What must be happening to the supply of grapes, from winter to summer, for the equiLiBrium price to fall?

Answer 1

The equilibrium price for grapes falls during summer due to increased supply outweighing the increase in demand.

Step-by-step explanation:

The equilibrium price for grapes falls during summer despite the highest demand because the increase in supply from winter to summer outweighs the increase in demand. This can happen due to several factors:

• Seasonal factors: Grape production is usually highest during summer due to favorable growing conditions. This leads to a larger quantity of grapes available in the market, which increases supply.
• Technological advancements: Improvements in farming techniques and technologies can increase grape yields, leading to an increase in supply.
• Imports: Grapes may be imported from regions where it is not winter, increasing the overall supply.

In contrast, the demand for grapes may be highest during summer due to factors such as increased consumption, higher demand for fruit-based desserts, or greater availability of grapes in supermarkets.

Overall, the decrease in grape prices during summer is a result of increased supply outweighing the increase in demand, leading to a lower equilibrium price.