At a price of $2,000, the demand for Ranger 60 mountain bikes from Cloyd's Inc. is 300, but only 191 bikes are being made. At a price of $2,300, the demand for the bikes is 250, and exactly 250 bikes are being made
If Cloyd'ssells each one of the bikes at a price lower than $2,300, _____.
a. a shortage of bikes will be created
b. the number of bikes being made will increase drastically
c. an inelastic demand for the bikes will be created
d. the demand and supply for the bike will attain equilibrium
ANSWER: a
If Cloyd'ssells each one of the bikes at a price lower than $2,300, a shortage of supply will result. When the price of a product reduces, the demand will increase, and the product will be in short supply. At $2,300, the demand and supply for Ranger60 mountain bikes attain a price equilibrium. Any price below $2,300 will result in shortage of supply, and any price above $2,300 will result in a surplus.
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