You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls. On day one of your vacation, you buy 10 small pearls for $10 from the 100 pearls available. The next day there is a storm that destroys the boats in the area, including the pearl driver's boats. The day you leave, you return to the pearl market and ask to buy 1 more pearl. 1.- estimate the price of pearls would be on the last day of your vacation 2.- would the price rise, decrease or stay the same? 3.- draw 1 diagram showing the supply and demand for pearls on the island before and after the storm. 4.- explain your estimated price for pearls on the last day of your vacation
You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls. On day one of your vacation, you buy 10 small pearls for $10 from the 100 pearls available. The next day there is a storm that destroys the boats in the area, including the pearl driver's boats. The day you leave, you return to the pearl market and ask to buy 1 more pearl.
1.- estimate the price of pearls would be on the last day of your vacation
2.- would the price rise, decrease or stay the same?
3.- draw 1 diagram showing the
4.- explain your estimated price for pearls on the last day of your vacation
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Introduction
The supply curve represents the direct relationship between the price and the quantity demanded of a commodity. There exists a positive relationship between the price and quantity supplied of a commodity as when the price of the commodity rises the producer tends to increase the quantity supplied in the market and vice versa.
The change in the price of the commodity causes a movement along the supply cure whereas when there is variation in any factor/determinant of the supply curve other than price then the supply curve tends to shift towards the right or towards the left. For example, the supply curve will shift backward when the price of raw material used in the production process rises when the govt change raise taxes rates or subsidies fall or technological degradation, etc.
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