Question

Instructions: Find an article from an online news source, illustrating a change in price or quantity in some market. Analyze the situation using economic reasoning.

If you want to use something related to COVID-19, that is totally fine

As a warning, avoid advertisements because they contain too little information for this exercise. Also, be wary of commodity and financial markets unless you have a good understanding of the particular market. Markets for ordinary goods and services are most easily analyzed.

1. Has there been a change in demand? Is so, was it an increase or decrease? What specific thing caused the change in demand-preferences, weather, etc 2. Has there been a change in supply? If so, was it an increase or decrease? What specific thing caused the change in supply-costs of inputs, weather, etc 3.Draw a supply-and-demand graph to explain this change. Be sure to label your graph and clearly indicate which curve(s) shifts. Also, make sure to note the new equilibrium price and quantity in the market!

Answer 1

The article which I have taken is from ECONOMIC TIMES discussing about the increase in the demand of commodities during the time of COVID-19.

Huge demand for food products in global markets due to COVID-19 outbreak (Name of the Article)

The TPCI ( Trade Promotion Council of India) gave the statement that there is an 100% increase in the demand of Esseential Commodities which includes rice, wheat and pulses and etc and also there was an increase in 15-20% of food confectionary items which includes biscuits, spices, or other confectionary itmes. Further there was a sharp increase in the Indian Exports of the items which include garlic and also chilli, ginger, cumin , fennel. The increase in these items were because of the reason that people were preferring more home remedies to treat any medical issue at home.

But elaborating about the Supply of the Commodities it was much slower as the Branded products like Organic Tattva, Amul and Dabur said that they are unable to meet the continous increase in demand and they put there orders on hold due to the non availability of the labour as well as some funds on which they were dependent. Thus, it can be observed that there is an increase in demand due to the pandemic but the increase in supply is much slower due to which a rise in prices can be observed with the time.

thus there will be an increase in prices and quantity simultaneously as shown in the figure and the New Equilibrium Price will be OP' and New Equilibrium quantity will be OQ' and New Equilibrium Point will be E'