You are the market analyst for a major clothing company that sells high-end designer clothing. The company has a production factory in a different country where the costs of labor are low. Thereafter, the company imports the clothing to the United States. You notice that a couple of changes are happening in the market at the same time. Rising unemployment in the economy leads consumer demand for luxury goods to fall. Simultaneously, a news exposé highlights the poor working conditions in the factory where the clothes are produced. These events lead to a consumer backlash against your company. What do you expect will happen to the equilibrium price and the equilibrium quantity? Explain your answer.

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The Answer of You are the market analyst for a major clothing company that sells high-end designer clothing. The company has a production factory in a different country where the costs of labor are low. Thereafter, the company imports the clothing to the United States. You notice that a couple of changes are happening in the market at the same time. Rising unemployment in the economy leads consumer demand for luxury goods to fall. Simultaneously, a news exposé highlights the poor working conditions in the factory where the clothes are produced. These events lead to a consumer backlash against your company. What do you expect will happen to the equilibrium price and the equilibrium quantity? Explain your answer.

You Are the Market Analyst for a Major Clothing Company