Longan are a tropical fruit, something like a cross between a lichee and a rambutan, grown commercially only in Thailand, South China, and Viet Nam. They grow on trees; there are many small, privately owned orchards of the trees. They spoil quickly, within a few days, after picking.

Consider the market for longan in Bangkok. For each of the following events, sketch the supply and demand diagram for longan, showing which curve(s) move how, and indicating the effect on price and quantity exchanged by symbols P and Q with arrows for up or down, --- for no change, ? for uncertain.

I'm not going to try to draw the diagrams on the computer, but let me explain these in words, you can draw the diagrams.

With these kinds of problem, what you have to do is ask yourself, IF THE PRICE OF THE GOOD does not change, and this thing happens, will

buyers want to buy more or less? (If yes, demand curve shifts)

sellers want to sell more or less? (If yes, supply curve shifts)

You answer those questions by simply using common sense -- if you were in this situation, what would you want to do?
 
 

1. Because of the financial crisis in SE Asia, many workers in Bangkok lose their jobs and incomes of most people in Bangkok fall.

If your income falls, you likely will buy less of most things at unchanged prices. So Demand shifts in. No reason for supply to change. Sketch the diagram: price goes down, quantity exchanged goes down.

2. Bad weather in the longan growing regions result in much less fruit per tree.

No reason for demand to change. But at unchanged price, one can pick less off any tree, so supply shifts in. Price goes up, quantity exchanged goes down.
 

3. Simultaneously, an insect infestation wipes out the crops of lichees and rambutan [substitutes for longan] in SE Asia, but a new pollination technique triples output of longan per tree.

The insects wipe out substitutes, so the substitutes are either no longer available or very expensive, so at unchanged price for longan, buyers will want to buy more. Demand increases, i.e. the demand curve shifts out. But at the same time, there is now more fruit per tree, so the supply curve shifts out too. Quantity exchanged must increase, but we don't know what happens to price -- it might go up, go down, or stay the same; it depends on the relative size of the shifts in the supply and demand curves which we just don't know.