Question

$$\begin{gathered} \text{Whathappenstothepriceandthequantityboughtandsoldinthecocoamarketifcountriesproducing} \\ \text{cocoaexperienceadroughtandanewstudyisreleaseddemonstratingthehealthbenefitsofcocoa?} \\ \text{Illustrateyouranswerwithademandandsupplygraph.} \end{gathered}$$

Short answer

It leads to decrease in supply and increase in demand, finally implying increase in market price & decrease in market quantity.

Step-by-step solution

Concept of Decrease in Supply 

Countries producing cocoa experience drought - leads to decrease in production capacity & supply. It shifts supply curve leftwards.

Concept of Increase in Demand 

A new study demonstrating health benefits of cocoa - leads to increase in demand due to favourable change in taste & preferences. It shifts the demand curve rightwards.

New Equilibrium Explanation 

Previous equilibrium is at E, at demand & supply intersection, with equilibrium price & quantity = P & Q*

It is assumed that increase in demand = decrease in supply

Corresponding increase & rightward shift in demand (to D') and decrease & leftward shift (to S') in supply leads to situation of excess demand. It creates competition among buyers and increases equilibrium price (to P'). However, at the new equilibrium E' (where new D' & S' intersect) - the equilibrium quantity remains same at Q*