when the demand for a good or service rapidly increases its price typically increases because suppliers cannot cope with the increased demand in economic terms this results in a shift in the demand curve to the right a sudden drop in demand causes the opposite to happen the supply in place is too great for the demand 
other demand shocks can come from the anticipation of a natural disaster or climate event such as a run on bottled water backup generators or electric fans a positive demand shock can come from fiscal policy such as an economic stimulus or tax cuts negative demand shocks can come from contractionary policy such as tightening the money supply or decreasing government spending whether positive or negative these may be considered deliberate shocks to the system examples of demand shocksthe rise of electric cars over the past few years is a real world example of a demand shock it was hard to predict the demand for electric cars and therefore for their component parts lithium batteries for example had low demand as recently as the mid 2000s from 2010 the rise in the demand for electric cars from companies like tesla motors increased the overall market share of these cars to 3 or roughly 2 100 000 vehicles the demand for lithium batteries to power the cars also increased sharply and somewhat unexpectedly lithium is a limited natural resource that is difficult to extract and found only in certain parts of the world production has been unable to keep up with the growth in demand and so the supply of newly mined lithium remains lower than it would be otherwise the result is a demand shock over the period from 2016 to 2018 demand for lithium more than doubled increasing the average price per metric ton from 8 650 in 2016 to 17 000 in 2018 1 over the past decade the increase in demand for electric cars from companies like tesla motors tsla has increased the overall market share of these cars to more than 4 of car sales in 2022 2 the demand for lithium batteries to power the cars also increased sharply and somewhat unexpectedly during this time demand exploded for electric vehicles and also battery powered mobile phones laptops and tablets from 2020 to 2022 the price of lithium has more than doubled again this is because the covid 19 pandemic initially caused a decrease in demand that caused the price of a metric ton of li to fall to 8 000 however as the economy recovered the price quickly spiked to 17 000 once again by the end of 2021 3 the cost has been passed onto the consumer raising the cost of electric cars in a positive demand shock environment the cathode ray tube is an example of a negative demand shock the introduction of low cost flat screen televisions caused the demand for cathode ray tube tvs and computer screens to drop to nearly zero in a few short years not incidentally the introduction of low cost flat screens caused a once common service job the television repairman to become virtually extinct 