Question

the price that a supplier assigns to a product is closely related to both the quantity of the product demanded by the market and the quantity of the product the supplier places in the market. Consider the example of Phantom Inc., which sells tablet computers. Phantom Inc. determines that if they price the tablet at $1,600, they will be able to sell 1,500 tablets per day. If they price it at $1,200, they will be able to sell 2,000 per day, and if they price it at $800, they will be able to sell 2,500 per day. However, Phantom Inc. is willing to sell only 1,000 tablets at the $800 price, 2,000 tablets at the $1,200 price, and 3,000 tablets at the $1,600 price. Using the information provided: 1. Construct a demand chart for the numbers given. 2. Construct a supply chart for the numbers given. 3. Construct an equilibrium price chart based on supply and demand and explain what the results mean.

Answer 1

When price was less than $1200 i.e $800 ,

buyers are demanding more and sellers are willing to supply less ( qty d = 2500 & qty supplied = 1000) .There exist "excess demand"

When price is higher than $1200 ,i. E $1600

buyers are demanding less (1500 units )

and sellers are willing to sell more ( 3000 units).

There is "excess supply".

At price $1200 ,equilibrium is achieved.