O-LevelEconomicsThe allocation of resources2281/12 · Oct/Nov 2015 · Q61 Mark
In August 2013, a lengthy strike in north-east India, where the finest and most expensive Darjeeling tea is grown, shut down the tea industry at harvest time. What is the likely outcome of such a situation on a demand and supply diagram for Darjeeling tea?
AThe price will rise because demand will switch to other teas.
BThe price will rise because the strike will cause a movement down the supply curve.
CThe price will rise because the supply curve will move to the left.
DThe price will rise because there will be a fall in demand for the remaining Darjeeling tea.
✓ Correct answer
C: The price will rise because the supply curve will move to the left.
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