Illustrating graphically and specifying the assumptions upon which your reasoning is based, describe briefly
i. The effects on the price and output of fresh maize of adverse weather conditions
Assumptions:
1. We assume that fresh maize production is primarily affected by adverse weather conditions such as drought, excessive rainfall, heatwaves, or frost.
2. The demand for fresh maize remains relatively constant, with no significant changes in consumer preferences or other factors affecting demand, such as changes in income levels or availability of substitutes.
3. The market for fresh maize is competitive, with numerous buyers and sellers, and no single entity or group of entities having significant market power.
Effects on Price and Output:
Adverse weather conditions can have significant effects on the price and output of fresh maize. Let's illustrate this graphically:
1. Price: Adverse weather conditions can reduce the supply of fresh maize as it negatively affects the growth and yield of maize crops. This decrease in supply shifts the supply curve to the left, as shown by the shift from S1 to S2 in the graph. As a result, the equilibrium price of fresh maize increases from P1 to P2. This implies that consumers would have to pay a higher price for fresh maize due to the decreased availability caused by adverse weather conditions.
[Graph: Shift of supply curve to the left and an increase in equilibrium price of fresh maize.]
2. Output: Adverse weather conditions can also lead to a decrease in the overall output of fresh maize. The decrease in supply caused by adverse weather conditions reduces the quantity of fresh maize produced, leading to a shift from Q1 to Q2 in the graph. This decrease in output indicates that fewer fresh maize units are available in the market due to the adverse weather conditions.
[Graph: Shift of supply curve to the left and a decrease in equilibrium quantity/output of fresh maize.]
Overall, adverse weather conditions affecting fresh maize production can lead to higher prices and a decrease in the output of fresh maize. This situation can have implications for consumers, as they may have to pay more for fresh maize, and producers may experience lower volume of output and potential income losses.