Question

In: Economics

1. Suppose we have two consumers in the market. Joe has the following demand curve: P=10-Q1....

1. Suppose we have two consumers in the market. Joe has the following demand curve: P=10-Q1. Lucy has the following demand curve: P=10-3Q2. Find (algebraically) the formula for the market (or aggregate) demand curve. Draw all 3 curves on 3 separate graphs that should be drawn next to each other (so I can see the horizontal summation of quantities).

Expert Solution

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Consumer 1 Demand

P=10-Q1

Q1 = 10 - P

Consumer 2 Demand

P= 10- 3Q2

3Q2 = 10 - P

Q2 = 10/3 - P/3

Market Demand = Q1 + Q2

Q1 + Q2 = 10 - P + 10/3 - P/3

Q1 + Q2 = 10 + 3.3333 - P - 0.3333P

Q1 + Q2 = 13.3333 - 1.3333P

P = (13.3333 - Q1 - Q2)/ 1.3333

P = 10 - 0.75Q1 - 0.75Q2

Price	Consumer 1	Consumer 2	Market
0	10	3.3333333	13.33333
1	9	3	12
2	8	2.6666667	10.66667
3	7	2.3333333	9.333333
4	6	2	8
5	5	1.6666667	6.666667
6	4	1.3333333	5.333333
7	3	1	4
8	2	0.6666667	2.666667
9	1	0.3333333	1.333333
10	0	0	0

Rahul Sunny answered 2 years ago

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