Illustrating graphically and specifying the assumptions upon which your reason is based, describe briefly the effect on the price and output of fresh maize of adverse weather conditions.
When adverse weather conditions, such as heavy rains or droughts, impact the cultivation of fresh maize, it leads to a decrease in the supply of maize. This decrease in supply causes a shift in the supply curve to the left.
Graphically, this shift in supply can be presented as follows:
|
S1 |
| S2
|
|
|____________________
Q
Q1 Q2 Q3
In the above graph, the original supply curve is labeled as S1. Due to adverse weather conditions, the supply curve shifts to the left, resulting in a new supply curve labeled as S2. As a result of this leftward shift, the quantity supplied at any given price decreases. This scenario can be seen with the change in quantity supplied from Q1 to Q2 and then to Q3.
Now let's consider the effect of adverse weather conditions on the price and output of fresh maize.
1. Price: The decrease in supply of fresh maize causes a shortage in the market. This shortage signifies that the quantity demanded exceeds the quantity supplied at the original price. Therefore, to balance the market, the price tends to rise.
2. Output: The decrease in supply due to adverse weather conditions means that farmers are producing less fresh maize. Therefore, the overall output of fresh maize decreases.
It is important to note that these assumptions can vary based on the severity and duration of adverse weather conditions, as well as factors like the availability of substitutes and the elasticity of demand.