Indicate whether the market price of a product will most likely go up or down in the following situations and why:
a) There is a drought in the Midwest (bushel of wheat)
My answer: Go up, becuase the supply is limited
b)Strawberries are in season with a bumber crop
My answer: Go up, there is high demand
c)It's the ski season(price of motel rooms)
My answer: Go down, more people will come so there able to offer discount
d)A nutrition study indicates that red meat should be eaten only in moderation, if it all (price of red meat)
-My answer:Go down, study shows it's not good for you
e)A major corporation announces that it has to borrow money from the government in order to stay in business (price of its stock)
-My answer: Go down
I disagree with your answers to b and c.
B) it will go down, becuase its in season
C)it will go up, because its in season
Yes. Resorts discount their rooms during low season when they have few customers. During the ski season, though, people will pay high prices because rooms are limited.
a) The market price of a bushel of wheat will most likely go up in the situation where there is a drought in the Midwest. This is because a drought can negatively impact the production and availability of wheat, leading to a decrease in supply. As supply becomes limited, the demand for wheat remains constant or increases, resulting in an upward pressure on the price.
b) The market price of strawberries will most likely go down when they are in season with a bumper crop. The reason is that with a bumper crop, the supply of strawberries becomes abundant. However, the demand might not increase proportionately, as consumers might have their own strawberry plants or may opt for alternative fruits. Therefore, with an excess supply and relatively constant or lower demand, the market price of strawberries is likely to decrease.
c) The market price of motel rooms during the ski season will most likely go up. This is because the ski season attracts more tourists and visitors to ski destinations, leading to an increase in demand for lodging. As the demand rises, the limited supply of motel rooms can command higher prices, allowing motel owners to capitalize on the higher demand during this peak season.
d) The market price of red meat will most likely go down when a nutrition study indicates that it should be eaten only in moderation, if at all. Such a study can influence consumer behavior and shift preferences towards healthier alternatives or reduce demand for red meat. As demand decreases, suppliers might lower the price to entice consumers and reduce inventory levels, causing the market price of red meat to decrease.
e) The market price of a company's stock will most likely go down when it announces that it has to borrow money from the government to stay in business. This announcement suggests that the company is facing financial difficulties, which can undermine investor confidence. As a result, shareholders might be inclined to sell their shares, leading to an increase in supply and a decrease in demand for the company's stock, consequently driving down the stock price.