Auerbach’s demand for frozen custard is given by P = 20 – 2QA while that for...

Auerbach’s demand for frozen custard is given by P = 20 – 2Q_A while that for Kotlikoff is given by P = 40 – 2Q_K. Supposing that these are the only two consumers in this market, what is the market demand for frozen custard?

Solutions

Expert Solution

P= 20 - 2QA

2QA = 20 - P

QA = 10 - 0.5P

P = 40 - 2QK

2QK = 40 - P

QK = 20 - 0.5P

Market demand = Q = QA + AK

Q= 10 - 0.5P + 20 - 0.5P

Q= 30 - P

Inverse demand : P = 30 - Q

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

You work for Mut the Custard, a frozen custard company. You’ve collected data on monthly sales...

You work for Mut the Custard, a frozen custard company. You’ve collected data on monthly sales (S, number of regular-sized frozen custards per month) the price of your regular-sized frozen custard (P, in dollars), and the population size in the different cities in which your company operates (N, number of people; you currently only have one establishment in each city). You estimate the following regression model: S = a + bP + cN. In your regressions, you usually look for...

Suppose that demand is given by P = 20 - Qd and supply is given by...

Suppose that demand is given by P = 20 - Qd and supply is given by P = 4 + Qs. Which of the following could represent the Social Marginal Benefit and Social Marginal Cost curves if there is a negative production externality? P = 16 - Qd and P = 2 + Qs P = 24 - Qd and P = 4 + Qs P = 20 - Qd and P = 2 + Qs P = 20 -...

Suppose that demand for a cigarettes (in millions of cartons) is given by Q=20 - ½ *P. Supply of cigarettes is given by Q=P.

Suppose that demand for a cigarettes (in millions of cartons) is given by Q=20 - ½ *P. Supply of cigarettes is given by Q=P. There is a negative consumption externality from cigarettes, in the amount of $2 per box.a. Draw the market for cigarettes, labeling the private marginal cost (PMC), social marginal cost (SMC), private marginal benefit (PMB) and social marginal benefit (SMB).b. What quantity of the good is consumed under the private market equilibrium?c. What is the socially optimal...

Assume the market demand curve is given by QM = 20 – P and the fringe...

Assume the market demand curve is given by QM = 20 – P and the fringe firm supply function is QFF = -6+P. The dominant firm’s marginal cost is MC = 4 and fixed costs are zero. 1. Using a new graph, explain what happens to residual demand curve if the fringe supply curve becomes perfectly elastic at $6. Further assume the dominant firm MC is upward slopping with an equation of MC = -2 +Q. Same market demand function....

Demand for bowling balls in a market is given by the equation P = 20-2q. The...

Demand for bowling balls in a market is given by the equation P = 20-2q. The cost of each ball is $4. a) If firm A is the only firm in the market, how many balls will A produce? b) If firm B joins the market what is the equation for B’s reaction line? c) If both A and B are in the market, what is the equation for firm A’s reaction line? d) What is the Cournot equilibrium quantity...

The market supply is given by P = 20 + Q. The market demand for good...

The market supply is given by P = 20 + Q. The market demand for good X is given by P = 100 - 2Q - PZ. PZ is the price of a related good Z. Find the market equilibrium for good X when PZ equals 38; denote the equilibrium as P1 and Q1. Find the market equilibrium for good X when PZ equals 44; denote the equilibrium as P2 and Q2. Using the midpoint method, the price elasticity of...

1. Consumer 1’s demand function is q = 20 – p, while consumer 2’s demand function...

1. Consumer 1’s demand function is q = 20 – p, while consumer 2’s demand function is q = 12 – 2p. 1) Draw the individual demand curves of each of two consumers. 2) Draw the aggregate demand function of the two consumers (bold the curve in your graphs). You can either use the method we discussed in class by dividing p into several intervals, or a more direct way by adding up the curves (see textbook). No matter which...

17.17. The demand for energy-efficient appliances is given by P = 100/Q, while the inverse supply...

17.17. The demand for energy-efficient appliances is given by P = 100/Q, while the inverse supply (and marginal private cost) curve is MPC = Q. By reducing demand on the electricity network, energy-efficient appliances generate an external marginal benefit according to MEB = eQ. a) What is the equilibrium amount of energy-efficient appliances traded in the private market? b) If the socially efficient number of energy-efficient appliances is Q = 20, what is the value of e? c) If the...

Per the USA Food and Drug Administration, frozen custard must contain 1.4% egg yolk solids and...

Per the USA Food and Drug Administration, frozen custard must contain 1.4% egg yolk solids and at least 10% milkfat. If the percentage of egg yolk solids is less than 1.4%, then it legally must be called ice cream. A food chemist is hired on a potential suspicion that Culver’s frozen custard does not meet the legal definition across all their loca- tions, so he decides to sample the vanilla custard at 50 different locations across Wisconsin. The sample mean...

The demand and supply equations for a product are given by QD = 20-P QS = -10 +2P

The demand and supply equations for a product are given by QD = 20-P QS = -10 +2P 1. Calculate the equilibrium price and quantity. 2. Calculate the price elasticity of demand and the price elasticity of supply at the above equilibrium point. 3. An excise tax of $1 per unit is imposed on the producers of the product. Calculate the new equilibrium price and quantity. Calculate the consumer and producer tax burden ( as a percentage of...

Subjects