Unlike the demand relationship, however, the supply relationship is a factor of
time. Time is important to supply because suppliers must, but cannot always,
react quickly to a change in demand or price.
So it is important to try and determine whether a price change that is caused by demand will be temporary or permanent.
Let's say there's a sudden increase in the demand and price for umbrellas in an
unexpected rainy season; suppliers may simply accommodate demand by using
their production equipment more intensively.
If, however, there is a climate change, and the population will need umbrellas year-round, the change in
demand and price will be expected to be long term; suppliers will have to change
their equipment and production facilities in order to meet the long-term levels of demand.
