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In the winter, which is the peak season for winter coats, the price of winter coats...

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer.In the case of strawberries, however , the reverse is true.The price of strawberries is lower in the peak season than it is in the winter season.

Provide three reasons to explain this seeming contradiction.

Ensure that you define any key terms used in your discussion.

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Answer #1
  • The first reason for such contradiction is the difference in the price elasticity of demand for coats and strawberries. Price elasticity of demand for coats is lower, than price elasticity of demand for strawberries. That is why it is possible for sellers to increase prices for coats. such growth of prices for strawberries would decrease demand and, respectively, sales.
  • Second of all, people are not able to give up coats, when it is cold. On the other hand, it is possible to give up strawberries and find some substitutes.
  • Finally, supply of strawberries strongly exceeds demand for it in the peak season.As per law of demand if supply is more than demand then price declines. That is why the prices are lower. The opposite situation is with coats in winter.In winter demand for coats is high compared to supply so prices rise. But in summer the demand for coats is less or negligible.
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