Application of the Supply-and-Demand model
Budget: $10 – $30 USD
Pick one product (for example, vegetable oils) and use the Supply-and-Demand model to explain why the price of this good has increased dramatically in the COVID-19 pandemic. Make sure to include the three steps listed below in your explanation.
When analyzing how the event affects the equilibrium in a market, we proceed in three steps.
1. Decide whether this event shifts the supply or
demand curve.
2. Decide in which direction the curve shifts.
3. Use the demand-and-supply model to see how the
shift changes the equilibrium price and quantity (i.e.,
to figure out the new market equilibrium).
When analyzing how the event affects the equilibrium in a market, we proceed in three steps.
1. Decide whether this event shifts the supply or
demand curve.
2. Decide in which direction the curve shifts.
3. Use the demand-and-supply model to see how the
shift changes the equilibrium price and quantity (i.e.,
to figure out the new market equilibrium).