Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 7

Catacompanies are committed to selling at the prices printed in their cataIf a catacompany finds its inventory of sweaters rising, what does that tell you about the demand for sweaters? Was it unexpectedly high, unexpectedly or as expected? If the company could change the price of sweaters, would it raise the price, the price, or 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, will the catacompany increase, decrease, or keep orders the same? Given what the catacompany does with its orders, what is likely to happen to empand output at the sweater manufacturer?