Microeconomics

Supply has an undeniable impact upon price. When supply goes down, price goes up. In this instance, a rapid decrease in supply has led to an increase in the price of lettuce. Unlike producers of other goods and services, farmers cannot always fine-tune their supply according to market demand, because of the impact of the weather upon their ability to produce. Farmers had already planted less lettuce, presumably based upon demand patterns from the year before. Yet demand levels for agricultural products from year-to-year are difficult to predict. For example, when the weather is warmer, people tend to eat more lettuce, even in the winter. Conversely, a scare about the safety of a particular type of produce, like spinach, can cause a rapid downturn in demand.

To make up for the decrease in supply due to a harsh cold snap and still ensure that their input costs are covered,...
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