Answer to Question #275582 in Microeconomics for anajow

Question

Demand Curve: There is typhoon. What is the effect to the umbrella?

Answer 1

The commodity here is the umbrella

A typhoon causes the quantity demanded of umbrellas to increase.Consequentially,the demand curve shifts to the right from D1 to D2. This creates a shortage of umbrellas in the market at the initial price, P1. Due to a shortage in the market, price starts to rise from P1 to P2 until the new equilibrium (e2) is achieved. At the new equilibrium, both price and quantity demanded increases.