Supply and Demand Graph Presentation

09/09/2010

“Taking advantage of vacant mall space, Toys “R” Us is opening 600 temporary shops—or “pop-up stores”—this fall, a move that doubles the number of its U.S. stores for the crucial holiday season.“Source: The Wall Street Journal

Toys “R” Us Regular Market

Price

QuantityD

0 S

Equilibrium Quantity

EquilibriumPrice

Toys “R” Us Holiday Season

As Toys “R” Us opens more shops, the supply of goods increases as well, causing a surplus. If all else remains the same, in order to erase this surplus, the company has to decrease prices. Although the Equilibrium price falls, both the quantity demanded and the Equilibrium Quantity increase.

Price

QuantityD

0 S

Equilibrium Quantity

EquilibriumPrice

1 S

“The toy retailer is

super-sizing a bet it made

last year when it opened 90

temporary mall-based

Toys “R” Us Express stores

during the holidays… “ -

The Wall Street Journal.

Economic fact – Increase in Supply

- as the supply increases, there is no change in demand.

- the fall in price brings an increase in the quantity demanded – a movement along the demand curve.