Question
please help with a reply... The United States' free-market economy is governed by the principles of supply and demand. One major import that the US
please help with a reply...
The United States' free-market economy is governed by the principles of supply and demand. One major import that the US has been struggling to receive following the COVID-19 pandemic are semiconductor computer chips (Vann, 2021). According to the laws of supply and demand, the quantity of a product produced will increase when the price of the product is produced. An increase in demand can cause a price increase. In the US, semiconductor electronics are in high demand for use in computers, mobile devices, and automobiles. More and more devices are relying on semiconductor computer chips, causing the demand to rise.
Unfortunately, the supply could not keep up with the increased demand, leading to a situation of low supply but high demand. In this case, there is a lower quantity of semiconductors available, leading to higher prices as dictated by the law of demand (as price increases, quantity decreases). The demand curve has shifted to the left, as a higher quantity of semiconductors is demanded in the US. However, the supply curve has shifted to the right, as there is a lower supply of semiconductors to be imported to the US. The equilibrium for the import of the product to the US has moved to a higher value, leading to higher prices.
In order for pricing of these critical computer chips to decrease, supply must be increased. Bringing supply back requires rebuilding the labor required to operate the supply chain, including warehouse workers, dock workers, and truck drivers (Vann, 2021). Other infrastructure such as shipping containers, which have also been impacted by imbalances in supply and demand, as well as warehouses will be required to rebuild the supply of semiconductor computer chips (Vann, 2021).
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