Supply Shock and Import Response

Steps:

• Floods destroy agricultural products, decreasing domestic supply.
• Decreased supply shifts the supply curve left, raising equilibrium price.
• Higher domestic prices create incentive to import more to satisfy demand.
• Increased imports fill the supply gap, boosting import volume.

Why D is correct:

• Law of supply and demand: reduced supply raises price, and higher prices drive up imports to restore availability.

Why the others are wrong:

• A: Price falls contradicts supply decrease, which raises price.
• B: Both fall ignores price rise from scarcity and import need.
• C: Imports fall overlooks how high prices encourage more imports.

Final answer: D