Question

VI) Provide an example in your own words where you use the Supply and Demand Model to explain a movement in prices.

Answer 1

One example that can be quoted here is the unfavourable weather conditions or drought occuring in a particular period as a result of which the food availability will become scares and this will decrease the supply great extent and this shift the supply curve to the left. The leftward shift causes and increase in price and decrease in the equilibrium quantity on the whole and in this way supply demand analysis can be understood especially when there are natural calamities