Web link of the article: www. _______________________
The price of avocados increases.
- Reasons for the price increase (try to be brief): California drought and Mexico avocado strike.
- Theoretical demand shifters: the number of buyers increased, causing the demand for avocados to increase and the demand curve to shift to the right.
- Theoretical supply shifters: California drought and the strike in Mexico caused the supply of avocados to decrease and the supply curve to shift to the left.
- Looking at my graph(s), I see that the equilibrium price has increased (or decreased) regardless of which of the two shifts (the shift in demand and the other shift in supply) is greater.
Note: At this point, if you are analyzing a double shift situation, you need to decide if you will utilize the short-cut approach, or draw three separate graphs. See the practice problem set for Module 2, which explains in great detail the short-cut approach and the answer key for 5 practice problems.
Your analysis at this point should be summarized in 3-5 sentences to explain how you arrived at your conclusion(s).
- Based on the findings from your graphical analysis, and the information in the article, you might state something along these lines: “My theoretical model predictions match what is stated in the article regarding the price of avocados.”
Note: The last sentence needs to state whether anything was mentioned in the article regarding the quantity of avocados sold, and if that matches your model’s prediction.
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