Question

Illustrating graphically and specifying the assumptions upon which your reasoning is based describe briefly the effect on the price and output of fresh maize of adverse weather conditions

Answer 1

To illustrate the effect of adverse weather conditions, let's assume a simple supply and demand graph for fresh maize.

Assumptions:
1. Adverse weather conditions will lead to a decrease in the supply of fresh maize.
2. Demand for fresh maize remains constant.

Graphical representation:
On the graph, let's plot quantity (output) of fresh maize on the x-axis and price on the y-axis. The initial supply curve (S1) shows the supply of fresh maize before the adverse weather conditions.

When adverse weather conditions occur, it leads to a decrease in the supply of fresh maize. This is illustrated by shifting the supply curve to the left, from S1 to S2. The magnitude of the shift would depend on the severity of the weather conditions.

The new equilibrium point (E2) is determined by the intersection of the new supply curve (S2) and the demand curve (D). The price of fresh maize increases from P1 to P2, indicating that consumers are willing to pay a higher price due to the scarcity of maize caused by adverse weather conditions. The output of fresh maize decreases from Q1 to Q2, reflecting the reduced availability.

In summary, adverse weather conditions decrease the supply of fresh maize, leading to higher prices and reduced output in the market.