“The price of air conditioners soars and has the biggest increase in almost 30 years”
This headline, published in the newspaper O Globo, is an example of the law of supply and demand, which explains a little about how the economy works.
This law affects the price of products. According to it, the greater the demand, the higher the price. The theory also says that supply is another factor that affects the price. The greater the quantity of an item on the market, the lower its price may be.
In the case of the price of air conditioners, what has been happening is an increase in demand as a result of record temperatures and a decrease in supply, due to the drought in Amazonas, which affected the transport of this product from the Manaus Free Trade Zone, where it is manufactured, to various destinations throughout Brazil.
Thus, the increase in demand and the decrease in supply were responsible for air conditioners having the biggest price increase since 1994.
