31. Strawberry Prices Drop as Late Harvest Hits Market Shoppers bought strawberr

Question

31. Strawberry Prices Drop as Late Harvest Hits Market Shoppers bought strawberries in March for $1.25 a pound rather than the $3.49 a pound they paid last year. With the price so low, some growers plowed over their strawberry plants to make way for spring melons; others froze their harvests and sold them to juice and jam makers. Source: USA Today, April 5, 2010 a. Explain how the market for strawberries would have changed if growers had not plowed in their plants but offered locals “you pick for free.” b. Describe the changes in demand and supply in the market for strawberry jam.

Explanation / Answer

Answer :- a.) If the growers had offered “you pick for free” deals, the supply of strawberries increases. The demand for strawberries at local grocery stores would have decreased as people substituted picking their own berries for buying them in the store. The demand curve for store-bought strawberries would have shifted leftward and the equilibrium price of strawberries purchased in the store would have fallen and the equilibrium quantity would have decreased.

b.) Growers increased the quantity of strawberries they sold to jam makers. The increased supply of strawberries to made into jam decreases the price of these strawberries. In turn, the lower price of strawberries lowers the cost of producing strawberry jam. In the market for jam, the supply of strawberry jam increased. The demand for strawberry jam did not change.

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