Demand Shock

An unexpected event that suddenly gives demand for goods or services the shock treatment. This temporary move can be positive (in which demand increases) or negative (decreases). Either way, there will be a corresponding change to the prices of goods or services.

Say a major nutritional study shows that eating an avocado a day can make you run twice as fast. Everyone dashes to the grocery store and loads up on avocados. And then runs back even faster for some more. This huge bump in demand leads growers and grocery stores to dramatically raise the price. That's a positive demand shock.

Here's a negative demand shock: Say a study is published three months later that shows the daily avocado habit is actually really bad for your spleen. Everyone suddenly stops buying avocados and the price shoots down.