Question

In: Economics

Suppose that Larry and Megan are the only consumers of pizza slices in a particular market.


3. Individual and market demand 


Suppose that Larry and Megan are the only consumers of pizza slices in a particular market. The following table shows their annual demand schedules: 

Price

(Dollars per slice)

Larry's Quantity Demanded

(Slices)

Megan's Quantity Demande

d(Slices)

14070
22550
31530
4515
505


On the following graph, plot Larry's demand for pizza slices using the green points (triangle symbol). Next, plot Megan's demand for pizza slices using the purple points (diamond symbol). Finally, plot the market demand for pizza slices using the blue points (circle symbol). 

Note: Une segments will automatically connect the points. Remember to plot from left to right,

image.png

Solutions

Expert Solution

Individual and market demand

The following is the individual annual demand of two consumers, Larry and Megan.

Price

Larry's Quantity Demanded

Megan's Quantity Demanded

1

40

70

2

25

50

3

15

30

4

5

15

5

0

5

From the above we need to calculate market demand schedule.

Market demand schedule is the horizontal addition of all individual demand schedules.

Price

Larry's Quantity Demanded

Megan's Quantity Demanded

Market Demand Schedule

1

40

70

110

2

25

50

75

3

15

30

45

4

5

15

20

5

0

5

5

Now plotting the individual demand schedules and market demand schedule in the following diagram.

Because of the inverse relationship between price and quantity demanded, the demand curve slopes downwards.


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