In the winter of 2006-2007, unusually cold weather prevented people from enjoying the great outdoors

You need to first assume the market is originally in equilibrium, meaning that both the supply and demand curves have intersected on the graph. Since people are trapped indoors, the demand for snowmobiles will decrease (shift to the left). This leads to a fall in quantity demanded (which is represented by the 'Qd' on the graph), but quantity supplied (which is represented by the 'Qs' on the graph) remains what it was at the old equilibrium. Since quantity supplied exceeds quantity demanded, we've got a surplus of Qs-Qd units.

To get rid of this surplus, producers will begin to cut their price. This incentivizes more people to buy snowmobiles and encourages less snowmobile production to occur. Eventually, we end up at the new equilibrium in red with a lower equilibrium price and a lower equilibrium quantity.

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