Question

At a price of $2,000 per unit, the demand for Rancho 60 mountain bikes from Cloyd’s Inc. is 300 units, which is the number of bikes they manufacture every year. If the marketing managers at Cloyd’s Inc. decide to sell each bike at a price lower than $2,000 per unit, _____.

Answer 1

Currently the quantity supplied and the quantity demanded for Rancho 60 mountain bikes is at an equilibrium point. If the marketing manager decides to lower the price of the bikes, then the quantity demanded should increase, and if Cloyd's Inc. isn't able to produce more bikes, then a shortage will result.