Assume the market for Easter rabbits is currently at long term equilibrium. Assume Australia is the largest supplier of easter rabbits. A sudden explosion in the rabbit population of Australia leading up to Easter. How will the market react?

The positive supply shock for Easter rabbits will shift the supply curve outwards, while demand remains unchanged. In the short term the quantity of Easter rabbits bought will increase while the price for these rabbits will decrease. In the medium term the price and quantity will begin returning to long term equilibrium as the shock effect dampens. Finally, in the long term the Easter rabbit market returns to long run equilibrium.

Answered by Patrick B. Economics tutor

1245 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain 4 key sources of monopoly power.


Why do firms only make normal profit in a perfectly competitive market?


What conflicts between macroeconomics objectives may occur in an economy?


In an economy consumption=50, investment=60, government spending=160, imports=60 and exports=40. What is the aggregate demand of the economy


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences