S$-$MP Analysis: Interest Rates and Output $-$ End of Chapter Problem

iner is a department manager at a big box store. Over the last month, sales have slumped, and he has lots of inve

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a$.$ How, if at all, should Javier adjust his orders for new products?

Javier should wait and see what happens next month, and if his inventory runs out, then he can place an orc Javier should place his orders according to his initial estimates.

The inventory buildup is not an equilibrium. Javier should respond by cutting back on his orders.

b$.$ How will his suppliers respond to this decision?

They will produce according to their initial demand estimates.

They will cut back on production.

They will expand their output.

They will not be affected.