Answer to Question #162804 in Microeconomics for 123

Question

Demand and supply of brazilian nuts

Answer 1

Solution:

The demand for Brazilian nuts is quite high since they have attracted the attention of health-conscious consumers, while at the same time the supply has decreased due to shifts in weather patterns that have affected harvests, pushing the prices high. The price elasticity of demand for the Brazilian nuts can be described as elastic since changes in demand has a corresponding influence on the price. Therefore, following the low supply and the correspondingly high demand for Brazilian nuts, their prices hiked by about 60%.