Question

Using the equilibrium graph below, answer the following questions.

Answer 1

A. Equilibrium price. This is the price where the supply of a product or service is equal to demand of a service or product whereby at the equilibrium there is a satisfaction between the producer and the consumer.

B. We know that the price is at equilibrium because both the supply and demand curves the intersect.

C. Now that the supply of the item is $200 and demand of the item is $100. We will say that there is a surplus of $100 which is being created on items.

D. The supply of the item is $100 and consumers demand is $200, then there is a shortage of $100 which is being created.

E. The suppliers don't want to supply more goods on $200 because if according to the graph the supply will be more there will be surplus of goods and prices goes down because of losses which will be created.

F. Suppliers wants to supply more goods at high price because their price will be high if they supply more goods at high price.

G. Consumers they don't demand items which are high priced because NOT all consumers who can afford, when the price is high priced. Therefore the price of item will increase while the demand of the item decreases.