Suppose that a major drought causes a 30 percent reduction in the peanut harvest

c. shortage; rise; fall

Suppose that a major drought causes a 30 percent reduction in the peanut harvest. This will decrease the supply for peanut because of natural disaster and thus there is a shift to the left of the supply curve. This shift will cause the shortage at the equilibrium price because the sellers supply less at all given prices while demand does not change. The shift also creates the new equilibrium in the market where the price is higher and the quantity is lower as compared to the old equilibrium.

• So if there is no change in demand, this event would cause a shortage at the original equilibrium price, and the equilibrium price will therefore rise and the equilibrium quantity will fall.