Question

How will limited supply of Harley-Davidson new bikes will stimulate demand?

Answer 1

Limited supply of Harley Davidson will stimulate demand in a positive way. Lesser the supply, people would be more eager to buy and thus it stimulates demand. It can be explained graphically as

As shown in the graph, in case of normal supply, the equillibrium point is reached early. As there is a supply crunch, supply curve shifts to the left,making the equillibrium point reached at a higher point. Thus the demand is stimulated as more number of people would demand for the bike but the supplier is not able to meet the requirement. Thus the number of interested customers build up, raising the demand of the bike. Thus the limited supply of Harley-Davidson new bikes will stimulate demand.