Answer to Question #94925 in Macroeconomics for Alvin

Question

An increase in demand during the start of an academic year for school bags raises the quantity of school bags demanded but not the quantity supplied

Answer 1

Manufacturers need more time to increase the quantity supplied while school opening takes approximately one week.Suppliers will need to study the market and increase the supply within one week which is not practically possible.Additionally,if suppliers go ahead and increase the supply the demand will fall to normal within a week before all bags are sold.suppliers will incur an additional storage cost waiting for another back to school season which may come when the consumer preference has shifted to a new design of bags.