Home › AP Macroeconomics › Economics › Demand and Supply › In the summer of 2000, unusually good weather, h…
In the summer of 2000, unusually good weather, heavy rains, cooler ocean temperatures, and calm seas, boosted salmon breeding and fishing conditions off the California coast. This shifted the salmon supply curve from S0 to S1, while demand for salmon stayed the same. The original equilibrium price was $3.25 per pound at a quantity of 250,000 fish. What happened to the new equilibrium price and quantity?
APrice rose to $3.50 and quantity fell to 200,000
BPrice fell to $2.50 and quantity rose to 550,000
CPrice fell to $2.50 and quantity also fell to 200,000
DPrice rose to $3.50 and quantity also rose to 550,000
Answer & Solution
Correct answer: B. Price fell to $2.50 and quantity rose to 550,000
1. Good weather is a natural condition, so it is a supply-side event, not a demand-side event.
2. Good weather increases the quantity fishers can supply at every price, shifting the supply curve right from S0 to S1.
3. A rightward supply shift moves the new equilibrium down along the unchanged demand curve.
4. Reading the new intersection gives a lower price, $2.50, and a higher quantity, 550,000 fish.
5. Options A and D have the direction backward, and option C gets the quantity direction wrong.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.3 | Changes in Equilibrium Price and Quantity: The Four-Step Process_
Related questions
A city's movie theaters reach a free-market equilibrium of $8 per ticket with 1,800 peopleA new back-pain drug would sell at a free-market equilibrium price of $600 per month, withWhat is the loss in total surplus that occurs when an economy produces at an inefficient qA seller would have been willing to accept less for a good than the market equilibrium priA consumer would have been willing to pay more for a good than the market equilibrium pricIf a government sets a price floor below the market equilibrium price, what is the expecteWhat hourly rate was the federal minimum wage set at, at the end of 2014?Rising incomes in a city shift the demand curve for rental housing to the right, moving th