Q42. - Algebra 2

Question

For Exercises 42-44, use the graph below that shows the supply and demand curves for a new multivitamin.

42. If the price for vitamins is $8 a bottle, what is the supply of the product and what is the demand? Will prices tend to rise or fall? 

Step-by-Step Solution

Answer

When price is $8, the demand is 300 thousands and supply is 200 thousands bottles of multivitamin. Also the prices will rise.

Step-1 – Apply the concept of demand and supply

In economics, the point at which the supply equals the demand is the equilibrium price. If the supply of a product is greater than the demand, there is a surplus and prices fall. If the supply is less than the demand, there is shortage and prices rise.

Step-2 –Compute the supply and demand of bottle

 Consider graphs that depicts the supply and demand curves for a multivitamin. 

When price is $8, interpret the value on quantity axes for both the curves.

When price is $8, the demand is 300 thousands bottles of multivitamins.

When price is $8, the supply is 200 thousands bottles of multivitamins.

Step-3 – Interpret the rise and fall of price

When price is $8, the demand is more than the supply of multivitamin bottles so, there is a shortage in the market and due to which the price of bottles will rise.

 

Hence, when price is $8, the demand is 300 thousands and supply is 200 thousands bottles of multivitamin. Also the prices will rise.