Question

In: Economics

Why do the price of some goods like Airline tickets to Europe go up during the...

Why do the price of some goods like Airline tickets to Europe go up during the months of heaviest consumption, while others like sweet corn go down during the months of heaviest consumption.

Solutions

Expert Solution

Ans. The price of airline tickets go up during the months of heaviest consumption because it is in heavy demand and when the demand is more the people are willing to pay even more amount because they may feel that if they are not going to buy it , there will be some other person to buy it at the heavy price as the demand is very high , so the customers do not think much. Even the airlines do not think of reducing prices because they know that there is heavy demand , people are in need so they will pay whatever is the amount. Hence due to increased demand the price rises but it is not so in the case of corn because the demand for corn rises at the time when there is season of corn and hence there is bulk of corn harvested at that time , so this is the reason the price is low because price only increases when the supply is less but in the case of corn , there is excessive supply so the price is reduced but the plane has limited number of seats and hence there is competition among travellers so any price can be charged .


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