A small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to manufacture the consumer product.What is this a result of?

Question

Quizplus · Accepted Answer

This is known as the multiplier effect, where a small change in consumer demand has a magnified impact on the demand for goods and services needed in the production process. This can result in a much larger shift in the overall economic activity of a particular industry or market.

A Small Increase or Decrease in Consumer Demand Can Produce