BDM End Term: 13 September 2026, Set 1 (May 2026 term)

Case Background: The Sivasagar, Assam Flood Economic Shock

The severe floods that struck the Sivasagar and neighboring districts in Assam in July 2026 present a real-world example of how natural disasters shock economic systems. Driven by extreme water levels in the Dikhow River and a devastating breach of the Desang River embankment, the disaster submerged entire towns like Sivasagar and nearby villages.
Floodwaters damaged local retail shops, washed away warehouse stock, and cut off major road transportation networks connecting Sivasagar to neighboring supply hubs like Jorhat and Dibrugarh.
As municipal tap water systems were contaminated and power lines collapsed, local markets experienced two concurrent economic shocks: Supply Shock (Leftward Shift): In areas like Station Chariali, local shopkeepers reported 4 to 5 feet of water entering their stores, destroying stored rations and inventory. Furthermore, submerged roads and railway lines cut off transportation, preventing new inventory from 1. entering the district. This drastic reduction in available goods shifts the supply curve heavily to the left.
Demand Surge (Rightward Shift): As tap water became contaminated and power outages halted water pumps, the demand for clean, bottled drinking water skyrocketed. Similarly, panic buying and urgent survival needs caused an immediate surge in the demand for essential commodities like bottled water, dry food kits, and water purification tablets. This shifts the demand curve to the right. 2. Based on the above data, answer the given subquestions.

Consider a case of local bottle vendor: Before the flood, the daily market for 1-liter bottled water in Sivasagar town was in equilibrium. Pre-flood Demand: Qd = 6,000−100P Pre-flood Supply: Qs = 1,000+150P (where P is price in INR per bottle, and Q is quantity in bottles) Following the flood, contamination shifted daily demand outward to: Qd′ = 8,000−100P. At the same time, logistics disruptions reduced daily supply to Qs′=150P.
What is the new post-flood equilibrium price (P*) and equilibrium quantity (Q*)?

Case Background: The Sivasagar, Assam Flood Economic Shock

The severe floods that struck the Sivasagar and neighboring districts in Assam in July 2026 present a real-world example of how natural disasters shock economic systems. Driven by extreme water levels in the Dikhow River and a devastating breach of the Desang River embankment, the disaster submerged entire towns like Sivasagar and nearby villages.
Floodwaters damaged local retail shops, washed away warehouse stock, and cut off major road transportation networks connecting Sivasagar to neighboring supply hubs like Jorhat and Dibrugarh.
As municipal tap water systems were contaminated and power lines collapsed, local markets experienced two concurrent economic shocks: Supply Shock (Leftward Shift): In areas like Station Chariali, local shopkeepers reported 4 to 5 feet of water entering their stores, destroying stored rations and inventory. Furthermore, submerged roads and railway lines cut off transportation, preventing new inventory from 1. entering the district. This drastic reduction in available goods shifts the supply curve heavily to the left.
Demand Surge (Rightward Shift): As tap water became contaminated and power outages halted water pumps, the demand for clean, bottled drinking water skyrocketed. Similarly, panic buying and urgent survival needs caused an immediate surge in the demand for essential commodities like bottled water, dry food kits, and water purification tablets. This shifts the demand curve to the right. 2. Based on the above data, answer the given subquestions.

Due to severe supply bottlenecks in flooded parts of Ward No. 2, local vendors raised the price of emergency dry ration kits from ₹200 to ₹300 per kit. Consequently, the quantity of kits demanded by local relief groups fell from 1,000 kits to 800 kits.
What is the Price Elasticity of Demand (PED) for the emergency ration kits?

Case Background: The Sivasagar, Assam Flood Economic Shock

The severe floods that struck the Sivasagar and neighboring districts in Assam in July 2026 present a real-world example of how natural disasters shock economic systems. Driven by extreme water levels in the Dikhow River and a devastating breach of the Desang River embankment, the disaster submerged entire towns like Sivasagar and nearby villages.
Floodwaters damaged local retail shops, washed away warehouse stock, and cut off major road transportation networks connecting Sivasagar to neighboring supply hubs like Jorhat and Dibrugarh.
As municipal tap water systems were contaminated and power lines collapsed, local markets experienced two concurrent economic shocks: Supply Shock (Leftward Shift): In areas like Station Chariali, local shopkeepers reported 4 to 5 feet of water entering their stores, destroying stored rations and inventory. Furthermore, submerged roads and railway lines cut off transportation, preventing new inventory from 1. entering the district. This drastic reduction in available goods shifts the supply curve heavily to the left.
Demand Surge (Rightward Shift): As tap water became contaminated and power outages halted water pumps, the demand for clean, bottled drinking water skyrocketed. Similarly, panic buying and urgent survival needs caused an immediate surge in the demand for essential commodities like bottled water, dry food kits, and water purification tablets. This shifts the demand curve to the right. 2. Based on the above data, answer the given subquestions.

To prevent price gouging during the crisis, the Sivasagar district administration capped the price of staple rice at Pcap = 40 INR/kg. The post-flood market functions for rice in Sivasagar are: Market Demand: Qd =12,000−100P Market Supply: Qs = −1,000+100P
What is the market outcome resulting from this government price ceiling?