Question

1. Suppose there are three buyers of candy in a market: Tex, Dex and Rex. The market demand and the individual demands are shown below: Price per candy Individual quantities demanded Market demand Tex Dex Rex $8 3 1 0 4 $7 8 2 2 12 $6 12 3 4 19 $5 17 4 6 27 $4 23 5 8 36 (1) Based on the individual demand information and market demand information offered, FILL the missing values in the table (2*5=10 points). (2) Among the three buyers in the market, which buyer demands the least at a price of $5? (10 points).Please make sure your answer is in complete sentence(s). Among three individual buyers, the individual who demands the lest amount at a price of $5, would be Dex. (3) At market price of $4, Tex decided to decrease his purchase on candy from 23 significantly to 5, can you list at least three possible reasons explaining his decreased quantity demanded for candy?(3*10=30 points). Please make sure your answer is in complete sentence(s). (4) Suppose at the price of $5, the total quantity demanded decreased from 27 to 23, is this a “change in the quantity demanded” or “change in demand”? Offer your answer with brief explanation. Please make sure your answer is in complete sentence(s). (10 points for correct answer and 10 points for correct explanation=20 points). (5) Assume at market price of $8, the market supply for candy stays the same, now both Dex and Rex decided to increase their purchase on candy, how does this change affect market demand(10 points), which direction market demand curve will shift to(10 points)? And how does this change affect equilibrium price as well as equilibrium quantity for candy market?(10 points). Please make sure your answer is in complete sentence(s).

Answer 1