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In: Economics

Consider the market for a good in which there are two income groups of buyers. There...

Consider the market for a good in which there are two income groups of buyers. There are 8 buyers with income $40 and 6 buyers with income $54. All buyers have the same utility function u = 20q − q 2 + m, where q denotes the amount of the good and m the money left after buying the good. Denote the price of the good by p. (a) [5 points] For each income group, determine the individual demand of a buyer. (b) [5 points] Find the market demand and draw the demand curve. (c) [5 points] Consider an individual buyer in income group $40. For the following prices, determine how much money is left with the buyer after buying the good: (i) p = 8, (ii) p = 13. (d) [5 points] Consider an individual buyer in income group $54. For the following prices, determine how much money is left with the buyer after buying the good: (i) p = 8, (ii) p = 13.

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Rahul Sunny answered 2 years ago
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