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silicon solar power
Supply and demand diagram: would the supply line be a horizontal line in this situation?
How would a supply and demand diagram explain this situation?
The price of silicon purchased by chip makers increased in 2003 from $30 to $72 in 2005.
I know the increase in price was due to the emergence of the solar power industry needing large quantities of silicon for their panels and there was a shortage of silicon until 2008 as it takes 3 years to build a new factory.
However, I'm not entirely sure how to draw this on a diagram without any figures.. would I do 2 horizontal lines across from $30 and $72 on the Price axis.. to show the supply has not changed as there is limited supply.. or has supply gone down as companies will be using it up?
Also, I'm confused to whether the demand line would curve or be straight?
I really have no idea.. as everything I read seems to point towards a big X on the graph.. yet silicon is inelastic isn't it as the companies will purchase at any price to keep going?
Someone please help 
xxx
Based on your information, it's hard to say if it's a linear supply curve or not. Since we don't know, how the quantity supplied would increase, stay put, or decrease. What we know for sure is that the supply curve will shift to the left due to the shortage of silicon. That causes the price to increase and the quantity supplied to decrease. On the same demand curve, it's expected that the quantity demanded will decrease.
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