Answer to Question #211286 in Finance for dav

Question

Discuss how seasonal factors influence supply and demand, and why markups on fresh fruits and vegetable are at their highest during the peak of season.

Answer 1

Solution

Weather influences prices by affecting changes in the demand and supply of goods. Dry seasons lower production levels, which then lowers supply, which in turn raises demand for the commodity due to scarcity, and hence causing a hike in prices for the commodity due to unavailability of the fruits.

During the peak of season the demand for fresh fruits and vegetable increases, and the cost of growing fruits and vegetables decreases due to increase in production, as a result markups are the highest.