Question

Think of a good or service you would stop buying if price went up by 10%.

Use the demand and supply model to show how the price of that product or service might increase by 10% and include a plausible explanation.

Your explanation should include a shift of either demand or supply (or both) of the good/service. It should also include a plausible explanation about what caused the curve(s) to shift. Be sure to explain which direction the curve(s) shifted and why. If both curves shift, give reasons for both and explain which one shifted more to explain why you can predict that the equilibrium price will increase because of the shifting curves.

Answer 1

I will give up on video gaming if prices went up by more than 10%. On a personal front I am getting very little time as a student to game and I am on a tight budget. So if prices went up by more than 10%, it will make little sense for me to continue with the hobby.

From an economic perspective, the price may go up because of supply issues. Due to Covid-19 pandemic, many factories are closed the world over. Even if production is happening then transport has reduced. This has lead to a shortage of products, including electronics. I have shown this in the below graph

As supply falls, the supply curve shifts to the left. This creates a new equilibrium point where the new price P1 is higher than older price P and new quantity Q1 is lower than old quantity Q.