Question

Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below.

a. Fill in the table for the missing values.

Price per Candy	Tex Qd	Dex Qd	Rex Qd	Total Quantity Demanded
$16	3	3	2
15	5	4		15
14		5	10	22
13	9		14	29
12	11	7	18

b. (i) Which buyer demands the least at a price of $13?  (Click to select)  Dex  Rex  Tex

(ii) Which buyer demands the most at a price of $15?  (Click to select)  Dex  Tex  Rex

c. Which buyer’s quantity demanded increases the most when the price is lowered from $15 to $14 (in absolute terms)?  (Click to select)  Tex  Dex  Rex

d. (i) Which direction would the market demand curve shift if Tex withdrew from the market?  (Click to select)  Right  No change  Left

(ii) Which direction would the market demand curve shift if Dex doubled his purchases at each possible price?  (Click to select)  Right  Left  No change

e. Suppose that at a price of $14, the total quantity demanded increases from 22 to 32. Is this a "change in the quantity demanded" or a "change in demand"?  (Click to select)  Change in the quantity demanded  Change in demand

Answer 1

a)
Price per candy $	Tex	Dex	Rex	Total quantity demanded
16	3	3	2	8
15	5	4	6	15
14	7	5	10	22
13	9	6	14	29
12	11	7	18	36
Market demand is total of individual demand
When price is $15, Rex's demand is $15-$5-$4=$6
When price is $14, Tex's demand is $22-$19-$5=$7
When price is $13, Dex's demand is $29-$14-$9=$6
b)
i
Dex since he demands only 6 units at a price of $13.
ii)
Rex since he demands the highest of 6 units.
c)
Rex from 6 to 10 in absolute terms
d)
i) Left as demand would fall.
ii) Right as demand would increase.
e) Change in demand as this is due to a change in demand determinant and not price of the good.