The demand and supply schedules for sunscreen at a small beach are shown below.

Question

The demand and supply schedules for sunscreen at a small beach are shown below.

Market for Sunscreen

Instructions: Enter your answers as a whole number.

a. If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied?

Qd =   bottles

     Qs =   bottles

     In this case, there would be  (Click to select)  no  downward  upward  pressure on the price.

b. What is the equilibrium price and quantity in the market for sunscreen?

     P = $   

     Q =   bottles

Price (dollars per bottle) Quantity of Sunscreen Demanded (bottles) Quantity of Sunscreen Supplied (bottles) $35 1,000 8,500 30 2,000 7,000 25 3,000 5,500 20 4,000 4,000 15 5,000 2,500 10 6,000 1,000

Explanation / Answer

Req a: Qd = 5000 bottles Qs = 2500 bottles There would be upward pressure on price as demand is more than supply. Req b: The equilibrium point s where the demand equals supply. Therefore, demand equals to supply i.e. 4000 units at price $ 20. Hence, Equilibrium pricce P =20 Equilibrium quantty Q =4000 Bottles

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