In 2011, Knight Electronics sold 350,000 digital video recorders (DVRs.) Based on the company’s analysis of the DVR market, the company believed that $160 was the equilibrium price based on the following supply and demand schedules.
2011 Price |
Amount Supplied |
Amount Demanded |
---|---|---|
$120 |
290,000 |
390,000 |
$140 |
320,000 |
370,000 |
$160 |
350,000 |
350,000 |
$180 |
380,000 |
330,000 |
$200 |
410,000 |
310,000 |
$220 |
440,000 |
290,000 |
As the price of gasoline rose and the economy hit the skids, consumers began driving less and going out less frequently for entertainment. With more people staying at home, DVR usages increased. In 2012 Knight revised its estimate of the amount of product demanded. At each of the above price points, they estimate that consumers will purchase (demand) 50,000 more DVRs. For instance, at $140, now 420,000 DVRs will be sold. The price/amount supplied relationship remains the same.
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