What are supply shocks?

A supply shock is when something unexpected happens that changes how much of a product or service we can get, like when your favorite toy suddenly becomes really hard to find.

Imagine you have a lemonade stand, and you use lemons from the tree in your backyard. One day, a big storm hits and destroys all the trees, boom! No more lemons. That’s a supply shock because it changed how much lemonade you can make. Your customers might be sad because they can’t get their usual tasty drink.

• A storm, like the one that destroyed your lemon tree.
• A fire, maybe at the factory where toys are made.
• A sickness that makes workers stay home.
• A new rule from the government, like a tax on something you use.

These events can make prices go up or down, just like how the price of lemonade might go up if lemons become hard to find. It’s like when your favorite candy becomes scarce, suddenly it feels more special (and maybe more expensive)!