Applying Supply And Demand: Real-World Examples ✓ Solved
Applying Supply and Demand: Real World Examples
For this assignment, find a news article that describes a change in supply, demand, or both in a real world market. The article must be recent (within the last six months) and must not be from an encyclopedia or reference website. Do not use blogs; instead, use well-established business or industry-specific websites. The best articles will focus on changes in price and/or sales of a particular product. Use only articles that discuss changes in price and/or sales but do not refer directly to supply and/or demand changes.
Summarize the article without quoting it; explain it as if you were telling someone about it. If you use direct quotes or paraphrases, remember that citations and references are required. Identify which graph (A, B, C, or D) illustrates the shift you identify by describing the change in price and equilibrium quantity. Be aware of the difference between a change in quantity and a change in the position of the curve. Some articles might describe situations where both curves shift.
Use paragraphs and remain focused on the article content. Provide a full URL link to the article along with an APA-formatted reference at the end of your submission. Important: This is a Microeconomic course, so do not choose articles discussing Macroeconomic issues like inflation or unemployment. Your submission must be at least 250 words long.
Paper For Above Instructions
The global market behavior is often depicted through the fundamental principles of supply and demand. Understanding these concepts is crucial for grasping how prices and quantities of goods fluctuate in response to varying market conditions. The article I selected, titled "Global Semiconductor Shortage Continues to Disrupt Tech Industry" from The Wall Street Journal (2023), articulates the significant shift in the supply curve faced by the semiconductor industry over the past six months. This article provides insight into the constraints impacting supply and the consequential effects on pricing and market equilibrium.
The semiconductor industry is pivotal in technology, serving as the backbone for a wide range of products, from smartphones to automobiles. According to the article, the COVID-19 pandemic, combined with geopolitical tensions and increased demand for electronic products, has led the supply of semiconductors to fall short of demand. Many manufacturers are struggling to keep up with the growing consumer expectations and technological advancements that necessitate high-performance chips. As a result, this situation illustrates a clear shift in supply—where supply has decreased but demand has remained relatively stable or increased.
The article emphasizes that the production capabilities have been hampered due to supply chain disruptions, labor shortages, and the high costs associated with raw materials. This predicament illustrates that the supply curve for semiconductors has shifted to the left, indicating a decrease in supply. Consequently, this shortage has culminated in increased prices for not only semiconductors but also the end products that utilize them. The price of semiconductors has surged, evidenced by industry reports reflecting increases of up to 30% in certain categories due to this limited supply (Wall Street Journal, 2023).
On the demand side, while the pandemic initially caused a dip in consumer spending, it eventually led to a surge in demand for electronic devices as people adjusted to remote work and learning. This amplified demand for semiconductors is compounded by an increase in automotive technology, which is increasingly dependent on semiconductor components. Therefore, the demand for semiconductors has escalated, correlating with the leftward shift of the supply curve, exacerbating price increases and leading to further strain on availability.
To visually represent the economic implications described in this article, Graph C from our supply and demand graphs collection exemplifies the situation described. In this graph, we observe a leftward shift of the supply curve, aligning perfectly with the article's contention of reduced supply amid rising demand. As the supply curve shifts left, the equilibrium price rises due to the scarcity of semiconductors against consistent or increasing demand, which aligns with the increased prices reported across the industry.
In conclusion, this real-world example underlines the essential principles of microeconomics in action. The semiconductor shortage demonstrates how shifts in supply—prompted by external conditions—can significantly alter market dynamics and consumer prices, thereby impacting multiple industries reliant on these crucial components. By studying such current events, one gains practical insights into how theoretical economic principles shape real-life market behavior.