During September 2020, due to the very hot weather, the production of tomatoes in the local market in Gaza decreased by 60%. Explain the effect of this factor on the market equilibrium of tomatoes ? using graph
Because of very hot weather the tomatoes production decreases its supply decreases. As the supply of tomatoes decreased by other factor than price, ie, the reason for supply decrease was not price but something else, the suplly curve of the tomatoes will shift left. As a result of this the quilibrium price in the market increases because demand is still constant and no shift in demand curve has taken place.
In the diagram as you can see, the price of the tomatoes in market increases from P to P' and the equilibrium quantity decrease from Q to Q'
Get Answers For Free
Most questions answered within 1 hours.