ECONOMIC SUPPLY & DEMAND

24 D-43885.3 Price Change DelayWe are now ready to discuss the effect of varying the price change delay. Thedelay obviously affects how quickly the price changes, and in the following exercises wewill see how well you can predict the behavior of price when that delay is modified.#6: Currently, the price change delay is 15 weeks. Assuming everything else remainsunchanged (system in equilibrium), would price or inventory change over time if thedelay is suddenly shortened? __________________Why or why not?________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________#7: Would you expect the system to reach equilibrium more quickly when the pricechange delay is equal to 30 weeks or 15 weeks? ____________Explain your reasoning:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________