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Chocolate Bar Demand Increases

Headline - Chocolate Shortage Expected

Now imagine the opposite situation: The demand for chocolate bars has increased, but the current price has not yet settled to a new, higher equilibrium price.

Suppliers will produce chocolate bars based on the current price—which is now too low—while consumers have increased the quantity they demand. Put another way, suppliers will produce a smaller quantity of chocolate bars than buyers are willing to purchase, resulting in a shortage. In this situation, some buyers will be willing to pay a higher price rather than go without chocolate bars. Suppliers will realize this and before you know it, the price is rising toward the equilibrium price.

Animated graph should be displayed here.

For each question below, click on the question to reveal the answer.

The demand for chocolate has increased. While the market is in transition, will there be a shortage or surplus?
Shortage. The increase in demand will lead to the quantity demanded being greater than the quantity supplied. Competition among buyers will lead to rising prices for chocolate bars. As the price rises, quantity supplied will increase and quantity demanded will decrease until the shortage disappears.
Will the new equilibrium price be higher or lower?
Higher. The increase in demand will result in a higher equilibrium price.
Will the new equilibrium quantity be higher or lower?
Higher. The increase in demand will result in a higher equilibrium quantity.