[brutuscat]

Demand should fall. Because of the [1]bullwhip effect.

- Someone wants a car and ask the car dealer

- car dealer orders 3 just in case because shortage

- distributor orders 6 for the same reason

- factory makes 12 because parts are short in stock

Result: cars in demand 1, cars in stock 12. No more just in time production and huge demand imbalance.

[1]https://web.archive.org/web/20220627205956/https://www.washi...

[wbsss4412]

In your example, demand doesn’t decrease, it stays stable while supply increases.

If anything you don’t want demand destruction if we are anticipating such a drastic increase in supply.

[brutuscat]

right, it is relative in a way too right? because for the factory and parts suppliers the demand is what comes down the supply chain... So one day they will be producing and getting parts for 10 cars and the next time nothing at all. So the part suppliers will see the demand of its production to fall, even though there might still be 1 person buying one car.