Explain how a change in one of the determinants of supply could lead to a decrease in the price of rice.

Supply is the quantity of a certain product that a producer is willing and able to supply into a market at a given price, in a given time period. Consider the market for rice: an abnormally fruitful harvest would mean that the supply curve in the rice industry for the given year would shift to the right. Assuming that the demand curve for rice remains the same, the increase in supply will lead to a rightward shift of the market equilibrium (i.e. the equilibrium price will fall and the equilibrium quantity will increase). 

JZ

Related Economics IB answers

All answers ▸

If monopolies are so inefficient, why do they still exist?


What is the effect of an indirect tax on the cigarette market?


What are the characteristics of a perfectly competitive market structure?


Explain the term price elasticity of demand