Question

3. The market for many goods changes in predic ways according to the time of year, in response to events such as holidays, vacation times, seasonal changes in production, and so on. Using supply and demand, explain the change in price in each of the rol lowing cases. Note that supply and demand may shift simultaneously.se a. Lobster prices usually fall during the summer peak lobster harvest season, despite the fact that people like to eat lobster during the summer more than at any other time of year. b. The price of a Christmas tree is lower after Christ- mas than before but fewer trees are sold. The price of a round-trip ticket to Paris on Air France fol. by more than $200 after the end of school vaca. tion in September. This happens despite the fact that generally worsening weather increases the operating flights to Paris, and Air France reduces the number of flights to Paris at is to Paris, and Air France therefore price.

Answer 1

Change in price in each of the following case is explained:

a. During the summer peak lobster harvest season, the supply of the lobster is more than the Demand for it, this will increase the competition among the suppliers and this will lead to fall in price.

b. The price of the Christmas tree is less after Christmas, but only fewer trees are sold this is because, during Christmas there is a lot demand for Christmas trees. Demand is more than supply for Christmas trees, these will lead to competition among buyers die to which suppliers will take advantage and will raise the price. After Christmas there is not much demand for Christmas trees this means demand is less than supply(supply >demand), due to which price falls due to competition among suppliers.

c. The price of a round-trip ticket to Paris on Air France falls by more than $200 after the end of school vacation in September, this is because during school vacation there is lot of demand but the supply is less due to reduced number of flights operating due to weather conditions. This leads to increase in demand that is demand > supply , this means competition among buyers, this lead to increase in price. But after the school vacation due to reduced demand that is Supply > Demand, the price falls.