Weather and the Demand Shift
According to the Associated Press on March 3, 2007, this year's winter weather (or lack thereof) has resulted in a shift to the left in the demand curve for some products such as snowmobiles, snow blowers, skier lodging, etc. The shift in demand has left many businesses in Bethlehem, New Hampshire in distress as their profits continue to fall. State official Steve Boucher said the average amount of financial loss due to weather reported by different businesses is between 5,000 and 8,000 dollars. However, one business lost 85,000 dollars worth of profits from the lack of winter weather.
In order to combat the loss of profits for businesses, the Department of Resources and Economic Development for the Bethlehem area is distributing surveys to businesses to get a sense of the losses imposed by the weather. After analyzing the surveys, the Department hopes to use the information in the future to help businesses respond to weather effects on demand. Boucher later went on to say that one key factor in helping businesses get back on their feet is innovation. Businesses such as motels that generally appeal to snowmobilers could offer incentives for ATVers.
This article demonstrates the effects of preferences changed by weather on the demand curve. Have you noticed any businesses suffering or prospering in your home town due to the weather? What do you think should be done to help businesses minimize their losses in these types of situations?
2 comments:
I'd assume that many businesses that base their income off of the snow and winter weather have suffered greatly this year, due to the warm weather. The leftward shift in the demand curve has caused businesses to produce fewer goods and reduce their prices, in order to get consumers to buy more of their products.
I don't think much can be done to minimize profit losses due to the weather, it's a gamble that these businesses are willing to take. Although, I think that if businesses provided more bargains and deals for their consumers they would have an increase of profit. Also, I think that businesses should invest more money into the restaurant industry because food is a resource that humans will always need. For example, opening more restaurants around ski resorts could create an increased profit for the ski resort.
I think the wether to be warmer and warmer is a big challenge for these producer who produce snowblowers. Because of warm wether, there will be a decrease in demand of snowblowers. Thus, demand curve shift to the left.Indeed, less customers and lower price make producer worried. They should innovate their products, otherwise, their profit will be less than the expend.
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