Given the business situation of Mrs. Acres Homemade Pies (p. 30) and using the economic concepts of supply and demand, explain 1) Discuss what you think will happen to the supply, demand and price of the product in the short-term; 2) Discuss what you think will happen to supply, demand and price of the product in the long-term. 3) Explain why you think supply, demand, or equilibrium price will be different, if at all, in the short-term and the long-term.

1) In the short-term, several factors may influence the supply, demand, and price of Mrs. Acres Homemade Pies. Since the company's main supplier of fruit filling went out of business due to a severe frost, the supply of pies will likely decrease. This decrease in supply, coupled with the existing demand for the pies, may result in a shortage in the short-term. As a result, the price of the pies could increase, as consumers are willing to pay more to obtain the limited supply.

2) In the long-term, the supply, demand, and price of Mrs. Acres Homemade Pies may stabilize and potentially change. The company's owner, Mrs. Acres, plans to purchase an orchard to secure a steady supply of fruit filling, indicating a potential recovery in the supply of pies. Assuming the investment in the orchard is successful, the supply of pies is likely to increase in the long-term. Depending on the market demand, the quantity and price of the pies may reach a new equilibrium.

3) The short-term and long-term scenarios will likely differ in terms of supply, demand, and equilibrium price due to the time required for adjustments. In the short-term, with a sudden decrease in supply, the demand may remain relatively constant or decrease slightly, resulting in a shortage and a higher equilibrium price. In the long-term, however, if the investment in the orchard is successful, the supply will increase and potentially meet or exceed the demand, leading to a potential decrease in price to restore equilibrium. Additionally, changes in consumer preferences, competitor actions, or external factors could also affect the supply, demand, and price dynamics in both the short and long-term.

To analyze the given business situation of Mrs. Acres Homemade Pies using the economic concepts of supply and demand, let's discuss the short-term and long-term implications for supply, demand, and price.

1) Short-Term Effects:
In the short-term, several factors can influence the supply, demand, and price of Mrs. Acres Homemade Pies. For example:
a) Supply: If the business experiences a sudden increase in orders or faces a shortage of key ingredients, the supply of pies may be constrained. Additionally, if the business faces issues with production or distribution, it can further affect the supply side.
b) Demand: The demand for Mrs. Acres Homemade Pies may fluctuate based on various factors, such as seasonal demand or changes in consumers' preferences. External factors like a rise in disposable income or promotional activities can also impact the demand.
c) Price: Short-term changes in supply and demand can lead to price fluctuations. For instance, if the demand surpasses the supply, there might be a scarcity, leading to potential price increases. On the other hand, if demand decreases significantly, pricing strategy may shift to stimulate demand through price reductions.

2) Long-Term Effects:
Considering the long-term perspective, other factors come into play:
a) Supply: Over time, Mrs. Acres Homemade Pies can expand their production capacity, invest in better equipment, or forge partnerships with suppliers to ensure a steady supply of ingredients. Such efforts may result in an overall increase in the supply of their pies.
b) Demand: The long-term demand for the product can be influenced by evolving consumer tastes, changing demographics, or broader economic trends. If Mrs. Acres Homemade Pies establishes a strong brand and loyal customer base, they can expect a sustained demand growth.
c) Price: In the long run, prices could be affected by changes in input costs, inflation, or economies of scale. If the business achieves cost efficiencies through scale, it may lead to price stabilization or even reductions.

3) Differences in Short-Term and Long-Term Outcomes:
Supply, demand, and equilibrium prices can differ between the short and long term due to several reasons:
a) Time to Adjust: In the short term, businesses might not have enough time to adapt their production or respond to dynamic market conditions fully. However, in the long term, businesses can adjust their strategies and operations to better match supply with demand.
b) Market Dynamics: Short-term changes can be influenced by immediate factors like sudden shifts in consumer preferences or unexpected events (e.g., changing food trends or a pandemic). In contrast, long-term changes are often influenced by more stable, structural factors such as population growth, income changes, or technological advancements.
c) Business Strategies: Organizations can undertake long-term strategies to expand or diversify their product offerings, tap new markets, or invest in research and development. Such initiatives can influence the supply and demand dynamics in the long run, resulting in different equilibrium prices.

It is crucial to note that the specific circumstances outlined in the Mrs. Acres Homemade Pies case study on p.30 are essential for a comprehensive analysis. This general explanation provides a framework for considering the short-term and long-term effects of supply, demand, and price.