Explain each of the following statements using supply and demand diagrams

Question

a) When a cyclone hits Queensland, the price of bananas rises in super markets throughout the country

b) When school holidays end, the price of picture tickets plummets

c) When a war break outs in middle east, the price of petrol rises, and the price of used Ford Falcons falls

Answer 1

a) Queensland is supplier of bananas, thus if cyclone destroys part of harvest then consequently there will be leftward shift of bananas supply curve.

b) Since part of customers are busy at school then it means that demand for tickets falls, thus equilibrium quantity and price falls too.

c) Middle east is supplier of oil, thus if US initiate war (by supplying weapons, training soldiers/future terorists as they usually do, or tacitly pays governments promising political support in exchange for bloody conflicts by the account of US tax-payers, etc.) then there will be leftward shift of oil supply curve. But since Ford requires oil to run (so these goods are compliments) consequently demand for substitute goods falls.