Toow! is an online retailer that sells, for lack of better words, bags of junk. These mystery bags of assorted goodies typically have low priced items in them, such as bacon salt and wooden pencils, but every once in a while (approximately 1 in 5,000), a bag includes a higher ticket item or two, such as an Apple IPad or a plasma TV, or both. Below is the supply and demand for bags of junk. Toow! sells a lot of junk and employs a lot of people.
1. The prices in this question are flexible
2. Assume the economy is in a funk and fewer people are willing to purchase bags of junk to gamble for the big ticket items. Adjust the graph to reflect this.
3. Suppose the economy, after 3 1/2 months, has still not recovered. Place the following statements that will likely occur in terms of Toow! in the box below.
The inventory at Toow! will increase
The inventory at Toow! will decrease
Toow! will cut production Toow! will lay off workers
Toow! will hire more people to keep up with demand
The output at Toow! will increase