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Its relative volume however could change as set by movements in the price or the supply. As a general economic principle:
When the price of a product or service increases, the demand for the respective product or service is expected to decrease, while the supply is expected to increase
Vice versa, if the price of a product or service decreases, the demand for the respective item will increase, while the supply will decrease.
Given the context of an increasing supply, the demand for Mrs. Acres' homemade pies is expected to decrease; only in the short-term however. As her products better penetrate the market and advertise for themselves, the demand is expected to once more increase in the long-term.
Scenario 3 -- Contracting the production to a restaurant chain and maintaining a percentage of the income
This particular scenario is the most difficult one to foresee for the...
Considering however a context in which their introduction of new variables is limited, it could be estimated that in the short-term, supply would significantly increase, leading as such to a relative decrease in demand; the retail price on the short run is expected to remain constant. In the long run however, it could suffer some increases as the necessity arises for the profits to generate a satisfactory return for both Mrs. Acres as well as the restaurant chain producing the pies. In terms of the long-term evolution of supply and demand, these are expected to reach equilibrium and not undergo major changes -- all other things equal.
References:
Potter, A., 1862, Political Economy: Its Objects, Uses and Principles: Considered with Reference to the Condition of the American People, Harvard University
Each of these different options would have more complex influence on price, supply, and demand in the long-term. Keeping production at its current level, while leading to a short-term price increase, would eventually cut the demand for Mrs. Acres' pies; in a "perfect" world, the price would increase until the demand reached current supply levels (i.e. eight thousand pies per month). Increasing production without raising the price would eventually allow
For instance, the price would naturally have to rise in order to cover the cost of the contracted production, but Shelly's company would not be getting more money per pie despite any increases in the original prices of the pies. Any net profits acquired through a price increase would be forfeited to the third party contractor. The overall net profit of each pie would also go down. This means