Understanding Supply Shock in Economics: A Case Study of Oyster Farms
What is a supply shock in economics?
Choose the correct answer:
a) A situation where demand exceeds supply
b) An unexpected event that changes the supply of a product
c) A planned decrease in production
d) A sudden increase in consumer preferences
Answer:
The correct answer is b) An unexpected event that changes the supply of a product.
Final Answer:
The event where a hurricane destroys oyster farms resulting in fewer oysters for sale is an example of a supply shock.
Explanation:
The situation described is an example of supply shock, a term used in economics. A supply shock is an unexpected event that suddenly changes the supply of a product or service, causing a ripple effect in the market.
In this case, the hurricane is the unexpected event that significantly decreased the supply of oysters available for sale, affecting oyster farmers, stores, and restaurants that depend on this supply.
Supply shocks can have a profound impact on businesses and industries, highlighting the importance of understanding and managing risks in the economy.