Econ news analysis: Taps off to 26000 slick moves down river

Priscilla Tang
F. 4C (30)
Econ news analysis:
Taps off to 26000 slick moves down river
Resource: South Ching Morning Post
Date: 2nd December, 2005
Officials in the central Heilongjiang had shut down water supplies to over 26,000
residents on 1st Dec, 05. Because of the pollution slick that caused a similar
shutdown in Harbin moves down the Songhua River and polluted the water.
After the water cut for three days, residents lined up with jugs and buckets to get
water from water trucks. This shows a phenomenon of excess demand (shortage)
of water. The price of water provided to residents was zero, (P0). As that was a
sudden case, which officials provide the free of charge water to residents, so
either any increase or decrease in demand or supply, the price will not change.
In this case, both the supply curve and demand curve didn’t move, because the
supply of water remains unchanged. As the quantity demanded of water is larger
than the quantity supplied, (Qd>Qs), hence long queues appeared, there is not
enough water to satisfy all the consumers. So, excess demand occurred. In case of
excess demand, the price has to increase to drive away some consumers.