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Suppose that there is a market for Christian books in California. A series of strong earthquakes...

Suppose that there is a market for Christian books in California. A series of strong earthquakes occurred in 2014, causing landslides, fires, building and roadway collapse. At the same time, a lot of people died or lost their homes. How do you think this disaster will affect the demand of Christian books in 2014? What will happen to the market equilibrium price and quantity of Christian book in 2014, as opposed to those in 2013? Discuss this using the concept of change in demand or/and supply.

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Answer #1

With a disaster in city, the demand for Christian books would fall. This is because in a disaster people are less likely to read a book when there is almost like a situation of being homeless. So lesser people would demand books to read and as a result the demand curve for books would shift inwards to the left from D to D'. Consequently, the price would fall fromP to P'due to low demand and the equilibrium demand would also decrease from Q to Q'.

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