Suppose the market for coffee is currently in equilibrium at a price of Frw 300 per Kg. An early Nyabihu Tea factory decreases the supply of coffee. Use supply and demand analysis to forecast the imp?

If the Nyabihu Tea factory decreases the supply of coffee, this will cause a shift in the supply curve to the left. As a result, the supply of coffee will decrease, leading to a new equilibrium in the market.

Assuming that the decrease in supply is significant enough to impact the market, the new supply curve will shift from S1 to S2, as shown in the diagram below:

Price
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| S2
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|----------------- Demand
| Quantity

The new equilibrium price and quantity will be determined by the intersection of the new supply curve (S2) and the demand curve. Let's assume that the new equilibrium price is Frw 350 per Kg.

At the new equilibrium price of Frw 350 per Kg, the quantity demanded and supplied will be lower than the initial equilibrium. This decrease in quantity is the impact of the Nyabihu Tea factory decreasing the supply of coffee.

To forecast the impact, we need to compare the quantity demanded and supplied at the initial equilibrium (Frw 300 per Kg) with the new equilibrium (Frw 350 per Kg). If the quantity demanded is significantly higher than the quantity supplied at the new equilibrium, it indicates a shortage in the market. Conversely, if the quantity supplied is significantly higher than the quantity demanded, it indicates a surplus.

However, without specific data on the quantities demanded and supplied at each equilibrium point, it is not possible to provide a precise forecast of the impact.