Figure 5.1 Fur Coat Market

 

Price

 

S

 

 

E1

P1

P0 E0

 

 

D1

D0

 

 

Q0 Q1

 

 

The demand and supply theory can be used to explain the changes in the fur coast and woolen and angora coat markets. Using the diagram in figure 5.1 above to represent the market of fur coast, before the harassment of people wearing fur curs by environmentalist, the demand curve for fur coast is represented by D1, and supply of fur coast is represented by S. The market achieves equilibrium at E1, where the price of fur coast is at P1 and the quantity demand and supply is at Q1. Changes in the consumer demands cause by environmentalist ant-fur group harassment of people wearing the fur would see demand decrease from D1 to D0, a shift to the left. When this happens, the price of fur coast will decrease from P1 to P0 and supply of fur coast would decrease from Q1 to Q0, that reflected by the new market equilibrium at E0. Therefore, the tumble in the price and sales of fur coat is caused by the decrease in consumer demand of the fur coasts, of which affects the price and sales quantity.

 

At the same time, since there is a substitute market for natural fur coats that is luxury woolen and angora coats, the demand for luxury woolen and angora would rise to reflect this change. This is the exact opposite of what took place in the natural fur coat markets. Using the diagram in figure 5.2 below to represent the market of luxury woolen and angora coats before the changes has occurred; the demand curve for luxury woolen and angora coat is represented by D0, and supply of fur coast is represented by S. The market achieves equilibrium at E0, where the price of fur coast is at P0 and the quantity demand and supply is at Q0. Changes in the consumer demands for natural fur coats, has seen the consumer switching to a substitute of luxury woolen and angora coat, and would have demand for luxury woolen and angora increase from D0 to D1, a shift to the right. At this point, the price of luxury woolen and angora has increase from P0 to P1, and supply increase from Q0 to Q1, that achieve a new market equilibrium at E1. Thus, increase the price and sales of quantity of the luxury woolen and angora coast.