Exogenous changes can sometimes affect both the demand and supply curves.

Question

Quizplus · Accepted Answer

Exogenous changes such as changes in government policies or natural disasters can affect both the demand and supply curves. For example, a hurricane may reduce the supply of a certain product, while also creating an increased demand for goods such as construction materials or emergency supplies. Exogenous changes, such as changes in government policies or natural disasters, can affect both the demand and supply curves. For example, if a government imposes a tax on a certain good, this will shift the supply curve to the left (decrease in supply) and the demand curve to the left (decrease in demand), resulting in a decrease in equilibrium quantity and an increase in equilibrium price.

Exogenous Changes Can Sometimes Affect Both the Demand and Supply