Marcus sells washing machines from his store on a main street in his city.He normally sells ten washing machines a month.He has been considering ways to improve his sales and has improved his advertising,his store signage,and utilizes social media to contact potential buyers in the most likely demographic group,but has only improved sales by one washing machine a month.This month he decided that if he has three times more washing machines in his store and sells them at the same price he is now offering them,he will sell three times more washing machines.What is the fundamental flaw in his plan?
A) Buyers are rational people and the demand for the product will only increase if the price is set at a higher level than it now is
B) In order to sell more washing machines he will have to raise the price per washing machine.
C) Demand for a product is not necessarily increased just because there is a greater supply,in addition,based on his sales,he has no doubt reached the equilibrium price.
D) The supply of a particular product is the quantity of the product that producers are willing to sell at each of various prices.Producers offer more of a product for sale at higher prices and offer less of the product at lower prices therefore,to reach his sales goal,he needs to raise the price.

Question

Quizplus · Accepted Answer

The fundamental flaw is that increasing the supply of a product does not necessarily lead to an increase in demand. In fact, based on Marcus' experience, he has likely already reached the equilibrium price where the quantity of washing machines demanded equals the quantity supplied. Simply increasing the supply without a corresponding increase in demand will not result in increased sales.

Marcus Sells Washing Machines from His Store on a Main