Please show, using a diagram with explanation, the effect on the UK market for t-shirts of a flood in Bangladesh, a leading cotton growing nation.

Student should realise that the flood will reduce global supply of cotton, causing the supply curve on the diagram to shift left. The market equilibrium will therefore move along the demand curve until the point of intersection with the new supply curve. This will be at a higher equilibrium price and smaller equilibrium output.

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Answered by Marshall M. Economics tutor

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