Question 4
Price DeterminationUse the information below to answer the question.
Farmers have discovered that prices of their crops are never stable. Lower prices are usually recorded during harvests while higher prices are recorded after harvests.
The lower prices recorded during harvests is mainly as a result of
- A.output being greater than demand
- B.higher demand with low supply
- C.poor quality of their produce
- D.poor market information.
Show the answer and explanation
Answer: A (output being greater than demand)
Explanation
At harvest supply is plentiful, so prices fall.