Answer to Question #303460 in Microeconomics for Ant

Question

Find a recent article in a newspaper or magazine illustrating a change in price or

quantity or equilibrium in some market. Analyze the situation using economic

reasoning.

a) Has there been an increase or decrease in demand? Factors that could shift the

demand curve include changes in preferences, changes in income, changes in the

price of substitutes or complements, or changes in the number of consumers.

b) Has there been an increase or decrease in supply? Factors that could shift the

supply curve include changes in costs of materials, wages, or other inputs;

changes in technology; or changes in the number of firms in the market.

c) Draw a supply-and-demand graph to explain the change identified. Be sure to

label your graph and clearly indicate which curve shifts.

Answer 1

From a recent article in the newspaper, we will investigate how the quantity and price of salmon change as a result of these weather conditions at the California coast.

Heavy rains resulted in higher-than-normal water levels in the rivers, which aids salmon breeding. The proliferation of plankton, the microscopic creatures at the bottom of the ocean food chain, was promoted by slightly colder water temperatures, giving a plentiful food source to everything in the ocean. During the fishing season, the ocean remained calm, therefore commercial fishing operations did not miss many days due to inclement weather. 

The following picture shows the price, supply, and quantity demand of the fish(in thousands) in 2020 and 2021.

a) Has there been an increase or decrease in demand?

Yes. The original equilibrium price is $3.25 per pound, and the original equilibrium quantity is 250,000 fish, according to the demand curve D₀ and supply curve S₀. If we do a comparison of the original equilibrium price and quantity to the new equilibrium price and quantity, the equilibrium price reduces from $3.25 to $2.50 at the new equilibrium E₁, however, the equilibrium quantity rises from 250,000 to 550,000 fish.

b) Has there been an increase or decrease in supply?

Yes. A change in natural environmental conditions that raises the quantity delivered at any given price is known as good weather. The supply curve shifts to the right, from the original S₀ to the new S₁, which is depicted in the table and graphic.

c) Draw a supply-and-demand graph to explain the change identified. Be sure to label your graph and clearly indicate which curve shifts.