The below figure shows the demand and supply curves in the market for coffee.S₁ and D₁ are the original demand and supply curves. Figure 3.5 Based on Figure 3.5, which of the following conditions would most likely move the point of equilibrium from A to D?

Question

Quizplus · Accepted Answer

A drought in Colombia, a major coffee producer, that affects the coffee harvest would cause a decrease in supply as there would be less coffee being produced. This would shift the supply curve to the left from ₁ to S1D1B11S1D1B0. As a result, the equilibrium point would move from A to D, where the new equilibrium price is higher and the new equilibrium quantity is lower. None of the other choices would lead to a shift in the equilibrium point from A to D.

The Below Figure Shows the Demand and Supply Curves in the Market