Q44. - Algebra 2

Question

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

44. At what quantity will the prices stabilize? What is the equilibrium price for this product? 

Step-by-Step Solution

Answer

The price is stabilized when 250 thousands bottles of multivitamin are manufactured. The equilibrium price is $10.

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 quantity

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

The point where the supply and demand curves are meet is known as equilibrium price. The quantity corresponding to equilibrium price is that quantity at which price stabilizes.

Therefore, the price stabilizes when 250 thousands bottles of multivitamin are required.

Step-3 – Interpret the equilibrium price

The point where demand and supply curves meet is $\left(250,10\right)$.

Therefore, the equilibrium price is $10 per bottle of multivitamin.

Thus, the price is stabilized when 250 thousands bottles of multivitamin are manufactured. The equilibrium price is $10.