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Drought in China

Drought in China - Economics Article Drought in China India...

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9/22/11 Economics Article Drought in China India stops export of cotton Supply curve shifts to the left o Price of raw cotton had shot up so there is a shortage which led to high prices in the world market Cotton materials o Raw cotton is an input and the price went up so the supply curve has a negative shock and it shifts to the left o High cotton prices=pricey t-shirts and jeans US market for raw cotton o World price is the relevant price though, and it has gone up o New price of cotton is now higher o So the impact on the US market is Quantity demand goes down When the price of the good itself changes, there are no shifts it either moves up the demand or supply curve Quantity demand is lowered and moves up the demand curve American quantity suppliers supply more but the buyers won’t demand as much A surplus results so the surplus will be exported and, since there is a shortage in the world, it works out well Poly-cotton mixed textiles o
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