Expert Answer
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Here is a step-by-step explanation of the decrease in equilibrium price and quantity of Japanese imported seafood in Hong Kong:
Background: In August 2023, the Hong Kong government announced a reduction in seafood imports from Japan, citing concerns over the release of contaminated water from the Fukushima nuclear power plant
The decrease in demand for Japanese imported seafood in Hong Kong is due to the announcement of reduced seafood imports from Japan. Consumers are concerned about the safety and potential health risks of consuming seafood from Japan.
Shift in Demand Curve: A decrease in demand results in the demand curve for Japanese imported seafood shifting to the left, indicating a reduction in the quantity of seafood demanded at every price level.
1. Hong Kong reduced seafood imports from Japan due to Fukushima nuclear plant concerns.
2. This led to decreased demand for Japanese seafood in Hong Kong.
3. Consumers are worried about safety and health risks associated with Japanese seafood.
4. The decrease in demand shifted the curve, resulting in lower quantity of seafood demanded at each price level.
As the demand curve shifts to the left, the new equilibrium point is reached where the quantity demanded and quantity supplied intersect, reflecting a lower quantity of Japanese imported seafood being demanded in Hong Kong.
Potential Decrease in Supply: Concerns about the safety of imported seafood from Japan could also result in a decrease in supply. If demand for Japanese imported seafood drops sharply, suppliers may cut back on imports or look for alternative sources. This potential decrease in supply would further contribute to the decrease in the equilibrium quantity and price of Japanese imported seafood in Hong Kong.
Equilibrium Price Decrease: As the demand for Japanese imported seafood in Hong Kong decreases and the supply potentially decreases as well, the equilibrium price also decreases. This lower price indicates that consumers are less willing to pay for Japanese seafood and there is a potential decrease in supply.
For a decrease in demand for Japanese imported seafood in Hong Kong, possibly due to fears of contamination, leads to a new equilibrium point with lower quantity and price. It also suggests that a potential decrease in supply, as suppliers seek alternative sources, further contributes to the decrease in equilibrium quantity and price.
Point-by-point explanation of the demand-supply diagram:
Draw the axes: Vertical axis for price, horizontal axis for quantity.
Plot initial equilibrium: Intersection of downward-sloping demand curve and upward-sloping supply curve.
Shift in demand: Decrease in demand due to contamination scare.
Find new equilibrium: Intersection of new demand curve and supply curve.
Explain the shift: Consumers want less seafood at initial price, creating excess supply and lowering the price.
Determine final equilibrium: Price continues to drop until quantity demanded equals quantity supplied at a lower price.
The reduced demand and potential decrease in supply of Japanese imported seafood in Hong Kong have caused the equilibrium price and quantity to decrease. This is due to consumers’ worries about the safety of seafood from Japan and the government’s choice to lessen imports.