Saved Bookmarks
| 1. |
Suppose there are 20 consumers for a good and they have identical demand functions: d(p) = 10 – 3p for any price less than or equal to 10/3 and d1(p) = 0 at any price greater than 10/3. What is the market demand function? |
|
Answer» d(p) = 10 - 3p if p ≤ 10/3 d1(p) = 0 if p > 10/3 Market demand = Summation of demand of all the consumers in the market For price ≤ 10/3 Market demand = 20∑d(p) (Since consumers have identical demand curve) = 20 x (10 - 3p) = 200 - 60p For price > 10/3 Market demand = 20 x d1(p) = 20 x 0 = 0 Market demand function = 200 - 60p{if p ≤ 10/3, if p > 10/3 = 0 |
|