The cost of cotton, as a result, has gone up almost 80 percent since July.For these reasons, the supply curve for cotton clothing shifts leftward; that is, producers supply less at any given price. In this situation, everyone would predict that demand for cotton clothing decreases, yet in fact, it is growing. As the economic recovery in the United States began, in particular, apparel makers and retailers placed orders for more inventory, spurring even more demand. Economically speaking, the demand curve doesn’t move along but shifts rightward; people still consume more cotton clothing despite the significant rise in the price.Encountering the rise in input costs, apparel makers attempted to hold the line on prices by, say, looking for more cost-effective materials that do not reduce quality and switching production to countries with lower labor costs or milder customs charges. But unable to catch up with consumption, suppliers have no choice but raise prices.
The V. F. Corporation, the maker of 7 for All Mankind and The North Face, says most brands will probably cost more next year, and its cotton-heavy jeans lines are particularly susceptible to increases.The Jones Group says its increases could be in the high single digits or more. This increase in prices, all in all, agree with the market finding a new equilibrium; particularly in this case, the demand and supply curves shift at the same time. The rise in price and quantity demanded along with the fall in supply, certainly, corresponds to an upward trend in equilibrium price—but the change in the equilibrium quantity is ambiguous.