Step 1. Draw the demand and supply model for the year before the good weather. The demand curve D₀ and the supply curve S₀ show the original equilibrium E₀: a price of $3.25 per pound and a quantity of 250,000 fish. (This is the price commercial buyers pay at the docks; consumers pay more at the grocery.)
Step 2. Did the event affect supply or demand? Good weather is a natural condition that affects supply.
Step 3. Increase or decrease? Good weather increases the quantity supplied at every price, so the supply curve shifts to the right, from S₀ to S₁.
Step 4. Compare the new equilibrium E₁ with the original. The price falls from $3.25 to $2.50 and the quantity rises from 250,000 to 550,000. Notice that the quantity demanded increased even though the demand curve did not move: the market moved along D₀.
| Price per pound | Quantity supplied in 2014 | Quantity supplied in 2015 | Quantity demanded |
|---|
Quantities in thousands of fish. The shift sliders add to the 2015 supply and to demand.