It is important to note that the article highlights a multitude of factors that are affecting supply and demand, and they are interconnected. The most impactful ones include strict Covid-19 lockdowns, weak consumption, and “supply-chain disruptions caused by the Covid-19 pandemic and fallout from the Ukraine war” (Moss & Liang, 2022, para. 5). The additional factors are rising inflation, lower disposable income among consumers, high fuel prices, high labor costs, unemployment, low consumer spending, and travel bans. All of them collectively restrict both the supply of and demand for goods and services in China, whereas some affect the entire global market, such as War in Ukraine.
In the case of the movement along the demand curve, there is an inverse relationship. If the price of a product or service increases, fewer people will want to buy it, which causes a decline in demand. Thus, shifts in demand can take place if variables are altered, such as income. An ideal example from the article is the fact that “rising inflation is also pushing up fuel and labor costs for companies while putting pressure on consumers’ disposable income” (Moss & Liang, 2022, para. 6). As a result, demand for Starbucks or Adidas is no longer as high as it used to be. Another illustration is Sandy Guo, who recently lost her job and stated: “no more Starbucks” (Moss & Liang, 2022, para. 8). The mentioned factors changed the economic conditions, which led to an increase in prices and a decrease in disposable income as well as a shift in demand. Both Starbucks and Adidas sell normal goods, but the demand curve shifts left due to lower disposable income. Thus, people buy less of something for the same price, which translates into equilibrium quantities having gone down. A similar observation can be made about decreased equilibrium prices.
Reference
Moss, T., & Liang, R. (2022). China’s Covid-19 lockdowns hurt sales of Starbucks coffee, Adidas sneakers.Wall Street Journal. Web.