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When an Unusually Bad Frost Reduces the Apple Crop in Washington

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When an unusually bad frost reduces the apple crop in Washington state, the price of canned apple juice may rise immediately in supermarkets, even though the juice on the shelves was made from last year's plentiful crop. The invisible hand theory tells us that the profit-seeking merchants who raise their prices in such situations


Definitions:

Second-Degree Price Discrimination

Practice of charging different prices per unit for different quantities of the same good or service.

Two-Part Tariff

A pricing method that involves a fixed fee plus a variable charge based on the quantity of goods or services consumed.

Peak-Load Pricing

Peak-load pricing is a pricing strategy where prices are higher during periods of high demand and lower during periods of low demand to manage demand and maximize profits.

Intertemporal Price Discrimination

A pricing strategy where businesses charge different prices for the same product or service at different times to maximize profits.

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