In the six months following the September 11 tragedy,consumer demand for large American flags saw a 200 percent increase,but the Eagle Manufacturing Company had a 500 percent increase in orders for the special machine that mass produces the larger flags.This dramatic increase is due to the:

Question

Quizplus · Accepted Answer

The accelerator principle explains how an increase in consumer demand for a product can lead to a proportionally larger increase in demand for the capital goods needed to produce that product. In this case, the increased demand for large flags led to a much larger increase in orders for the machines that produce them.

In the Six Months Following the September 11 Tragedy,consumer Demand