US ag and food markets are often heavily influenced by seasonality and holiday demand. Many (but...

US ag and food markets are often heavily influenced by seasonality and holiday demand. Many (but not all) fresh pumpkins are produced for Halloween, and farmers time most of their production so that their pumpkins are ripe and ready to pick within 10 days before Oct. 31. Draw two graphs to show how Demand and Supply curves shift over time – the first graph is for Demand (D) and Supply (S) seven days before 31, and the second graph is for Demand and Supply three days after Oct. 31. Briefly explain any changes in the D and S curves, as you have drawn them.

Solutions

Expert Solution

In the above diagrams, we assume a case of proportional change which basically means that the change in demand is equal to change in supply and vice versa.

Case 1: A week before Halloween, the demand for pumpkins will increase and hence, farmers also produce in a way so that they can supply enough when the demand rises. Therefore, there is a rightward shift in demand and supply curve.

Case 2: After Halloween, the demand and supply for pumpkins will fall as compared to a week before Halloween and hence, there is leftward shift in both demand and supply curves.

Please refer to the handwritten notes for detailed solution

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Rahul Sunny answered 1 year ago

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