Answer to Question #139882 in Economics for Dilnasheen baig

Question

supply of the apples in the market are suddenly decrease because of drought and consumers turn to Pears as a substitute for apples. How would you explain this change in the market in supply and demand term with the help of Diagram and schedule?

Answer 1

If supply of the apples in the market suddenly decreases because of drought, then the equilibrium price of apples will increase, and the equilibrium quantity will decrease. As a result, the demand for Pears which are the substitutes to apples will increase because of the comparatively lower price.