Illustrating graphically and specifying the assumptions upon which your reason is based, describe briefly
i. The effects on the price and output of fresh maize of adverse weather conditions. Draw an exact graph illustrating the above information
In this scenario, adverse weather conditions are expected to negatively impact the production of fresh maize. To illustrate the effects on the price and output of fresh maize graphically, we can use the supply and demand framework.
Assumptions:
1. The market for fresh maize is competitive, with many buyers and sellers.
2. There are no other factors affecting the price and output of fresh maize, apart from the adverse weather conditions.
3. The adverse weather conditions are expected to decrease the supply of fresh maize.
Graph:
/\
| S (initial supply)
| /\
| / \
| / \
| / \
| / \
| / \
| / \
| / \
| ------------------------------------
| Q1 Q2 Q3 (quantity)
In this graph, the y-axis represents price and the x-axis represents quantity. The initial supply curve, S, reflects the market equilibrium before the adverse weather conditions. The intersection of supply and demand (not shown in the graph) determines the initial price and output of fresh maize (Q1).
Due to adverse weather conditions, the supply of fresh maize decreases. This causes the supply curve to shift to the left, from S (initial supply) to S' (new supply). The shift signifies a decrease in the quantity supplied at any given price level.
The new equilibrium, where the new supply curve intersects with the demand curve, occurs at point Q2 with a higher price level. At this new equilibrium, there is a decrease in the quantity of fresh maize supplied (Q2) compared to the initial equilibrium (Q1).
Overall, adverse weather conditions lead to a decrease in the output of fresh maize and an increase in its price.