and ship out their catalogues, they are committed to selling at the prices printed in their catalogues. If a catalogue company finds its inventory of sweaters rising, what does that tell you about the demand for sweaters? f the inventories are rising for sweaters we know that demand for sweaters must be (_increasing , falling ). This is because prices are fixed, so this implies that people are buying less of the good due to a C increase, decrease ) in demand (see Figure 6.1b). In most circumstances, this accumulation of inventories suggests that the demand for sweaters was (unexpectedly, high, unexpectedly low, as expected ) since companies try to smooth out production to minimize costs. f the company could change the price of sweaters, it would (raise the price, lower the price, keep the price the same ). Given that the company cannot change the price of sweaters, consider the number of sweaters it orders each month from the company that makes its sweaters. If inventories become very high, the catalogue company will (increase, decrease, keep orders the same ). Given what the catalogue company does with its orders, what is likely to happen to employment and output at the sweater manufacturer? In most cases, output and employment is likely to („increase.
and ship out their catalogues, they are committed to selling at the prices printed in their catalogues. If a catalogue company finds its inventory of sweaters rising, what does that tell you about the demand for sweaters? f the inventories are rising for sweaters we know that demand for sweaters must be (_increasing , falling ). This is because prices are fixed, so this implies that people are buying less of the good due to a C increase, decrease ) in demand (see Figure 6.1b). In most circumstances, this accumulation of inventories suggests that the demand for sweaters was (unexpectedly, high, unexpectedly low, as expected ) since companies try to smooth out production to minimize costs. f the company could change the price of sweaters, it would (raise the price, lower the price, keep the price the same ). Given that the company cannot change the price of sweaters, consider the number of sweaters it orders each month from the company that makes its sweaters. If inventories become very high, the catalogue company will (increase, decrease, keep orders the same ). Given what the catalogue company does with its orders, what is likely to happen to employment and output at the sweater manufacturer? In most cases, output and employment is likely to („increase.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:19. (Catalogue companies are the classic example of perfectly inflexible prices because once they print
and ship out their catalogues, they are committed to selling at the prices printed in their catalogues. If
a catalogue company finds its inventory of sweaters rising, what does that tell you about the demand
for sweaters?
If the inventories are rising for sweaters we know that demand for sweaters must be increasing, falling
). This is because prices are fixed, so this implies that people are buying less of the good due to a .
increase, decrease ) in demand (see Figure 6.1b). In most circumstances, this accumulation of
inventories suggests that the demand for sweaters was unexpectedly, high, unexpectedly low, as
expected ) since companies try to smooth out production to minimize costs.
If the company could change the price of sweaters, it would (raise the price, lower the price, keep the
price the same ). Given that the company cannot change the price of sweaters, consider the number of
sweaters it orders each month from the company that makes its sweaters. If inventories become very
high, the catalogue company will (increase, decrease, keep orders the same ).
Given what the catalogue company does with its orders, what is likely to happen to employment and
output at the sweater manufacturer? In most cases, output and employment is likely to increase.
decrease, keep the same ) for the sweater manufacturer.
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