ECON 1B03 Lecture 3: Microeconomics week - video lectures #3
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The market demand curve
a. slopes upward.
b. is found by vertically adding the individual demand curves.
c. represents the sum of the quantities demanded by all the buyers at each price of the good.
d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.
When we move along a given demand curve,
a. | all nonprice determinants of demand are held constant. | |||||||||||||
b. | only price is held constant. | |||||||||||||
c. | all determinants of quantity demanded are held constant. | |||||||||||||
d. income and price are held constant. When the price of a good or service changes,
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The generalized demand and supply functions for good X are
Qd = 10 -2Px - 4PY + M Qs = 10 + 2PX
Ā Where: Ā Ā QD = quantity demanded of good X Ā Ā Ā PX = price of good X Ā Ā Ā M = consumer incomeĀ Ā Ā Ā PY = price of good Y |
Ā Ā Ā Ā QS = quantity supplied of good X Ā Ā PX = price of good X Ā |
A. Are good X and good Y substitutes or complements? Why?
B. Is good X a normal good or an inferior good? Why?
C. What is the demand function when PY = $4 and M = $600?
d. Use the demand function you found in part c. and solve for the equilibrium price (Po) and the equilibrium quantity (Qo).
e. Find the inverse demand function and the inverse supply function.
f. Sketch this market.