Price Demand Supply $10 185 208 $9 187 205 $8 188 202 $7 190 199 $6 191 196 $5 1
ID: 2776974 • Letter: P
Question
Price
Demand
Supply
$10
185
208
$9
187
205
$8
188
202
$7
190
199
$6
191
196
$5
193
193
$4
194
190
$3
196
187
$2
197
184
$1
199
181
1. To sell 196 doses to customers, what will the price need to be?
2. For stores to be willing to sell 196 doses, what will the price need to be?
3. How many doses will customers want to buy if the price is $2?
4. How many doses will suppliers want to sell if the price is $2?
5. Is there excess supply or excess demand at $2?
6. What is the equilibrium price? How can you tell?
Price
Demand
Supply
$10
185
208
$9
187
205
$8
188
202
$7
190
199
$6
191
196
$5
193
193
$4
194
190
$3
196
187
$2
197
184
$1
199
181
Explanation / Answer
1) To sell 196 doses to customers the price need to be as per demand as $3.
2) For stores to be willing to sell 196 doses, the price need to be $6.
3) 197 doses will customers want to buy if the price is $2
4) 184 doses will suppliers want to sell if the price is $2
5) There is excess demand at $2 of 197-184=13 doses,demand outpaced supply.
6) At equilibrium price, Demand=Supply=193 at price of $5.If price is <5$ i.e 4$ demand exceeds supply and the customers would drive the price up as long as price is less than $5 till the demand equals supply and price is $5,on the other hand if price is >5$ i.e 6$ supply exceeds demand and the customers would drive the price down as long as price is greater than $5 till the demand equals supply and equilibrium price of $5 is reached.
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