Effects of Decreased Supply of Bottled Water on Equilibrium Price and Quantity

Introduction:
The law of supply and demand is the foundation of the market economy. It describes the relationship between the price of a good or service and the quantity that consumers and producers are willing to buy and sell in a given market. The equilibrium price and quantity are the market-clearing price and quantity at which the quantity demanded equals the quantity supplied.

Decreased Supply of Bottled Water:
If there is a decrease in the supply of bottled water, this means that producers are producing and offering less bottled water for sale in the market. There are several reasons why the supply of bottled water may decrease, such as:

- A decrease in the availability of raw materials for making plastic bottles
- A decrease in the availability of water sources for bottling
- A decrease in the number of bottling plants due to natural disasters or other factors

Effects on Equilibrium Price:
When the supply of bottled water decreases, the equilibrium price will increase. This is because there is now less bottled water available for consumers to buy, and they are willing to pay a higher price to get it. The increase in price will also cause some consumers to switch to other substitutes, such as tap water or other beverages, which will further increase the demand for these substitutes and put upward pressure on their prices.

Effects on Equilibrium Quantity:
When the supply of bottled water decreases, the equilibrium quantity will decrease. This is because there is now less bottled water available for consumers to buy, and some consumers will switch to other substitutes or reduce their consumption of water altogether. This decrease in quantity will also reduce the revenue and profits of bottled water producers, which may lead to further decreases in supply in the future.

Conclusion:
In summary, a decrease in the supply of bottled water will lead to an increase in the equilibrium price and a decrease in the equilibrium quantity. This is a classic example of the law of supply and demand at work, and it highlights the importance of understanding market dynamics when making decisions about production, pricing, and consumption of goods and services.

, supply decrease that curve shown upward so at the new equilibrium point price of the commodity increase and quantity of commodity decrease