Answer to Question #81767 in Microeconomics for patrina greaves

Question

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer. In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season.

Provide THREE reasons to explain this seeming contradiction.

Ensure that you define any key terms used in your discussion.

Answer 1

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer, because the demand for coats in the winter increases, so both the equilibrium price and quantity increase.

In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season, because the supply of strawberries in the winter increases, so the equilibrium price decreases and equilibrium quantity increases.

The other additional reasons may be: changes in preferences, good or bad season, change in production costs etc.