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So, thank you Mr Chan,
I am Mok King Shing.
I will continue to explain the questions to you.
For question 2.1 b,
it states that
It asks that
how will the equilibrium market price and quantity of bread in HK change due to the flooding in China?
First of all
we have to take a look into the supply and demand curves of the situation
which is this Diagram.
Here,
the red line is the original supply curve of bread.
The green line is the new supply.
And the blue line is the demand curve.
We know that
wheat, flour and bread are Complement Goods.
As bread is made from flour which is made from wheat,
the flooding damaged a large amount of wheat
leading to a decrease of supply in wheat, flour and hence bread.
The supply curve will then shift from the right to the left.
Here,
from red to green,
you can see that the intersection point of supply and demand curves become higher.
The equilibrium price of bread increases.
Also,
the intersection point is closer to the left.
The equilibrium quantity decreases.