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?

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

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