Question

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water

Answer 1

If Florida experiencing a hurricane which knocked out the regional water supply for several days then the demand for bottled water increased remarkably. This increase in the demand of bottled water shifts the demand curve rightwards and supply curve remains the same. This shift in the demand of bottled water will increase the equilibrium price and equilibrium quantity in a market economy.