The diagram below represents the demand and supply curves for good Y (which is a foodstuff). A recent report suggests that the good has positive externalities in consumption. However, a poor harvest this autumn has resulted in a reduced output.
Which ONE of the following changes to demand, supply and price would occur due to these changes in the market conditions?
Select ONE answer:
Explain your answer in a diagram:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This is multiple choice question is suitable for Economics KS5 classes.
The answer is 2 – Demand will go up due to the report, but supply will go down due to the poor harvest, leading to an increase in price.
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