Please help me understand this Microeconomics question?
Feb 26, 2010
in
Hurricane
I’m trying to understand how supply and demand works but I’m overthinking it and could use some pointers.
Assume that a major hurricane wipes out over 50% of all rubber trees in Central America. How would this effect the demand, supply, equilibrium price, and equilibrium quantity (Increase, Decrease, or No Change) of Rubber.
Like this post? Subscribe to my RSS feed and get loads more!
2 comments
My love is gone on February 26, 2010 at 11:48 pm
1. demand increase : since requirement is more and quantity is less
2. supply decrease : due to less quantity
3. equilibrium price increase since demand increased
4.equilibrium quantity also decreases
bigbudda87 on February 26, 2010 at 11:48 pm
the supply would decrease while the demand would increase/stay the same, this in turn would most likely cause inflation of rubber prices. no idea what you mean by the "equilibrium" stuff but, if supply drops while demand stays the same/increases prices go up. and just the opposite if demand goes down while supply stays the same/increases. sorry for repeating myself