ECO 305 Lecture Notes - Lecture 4: Lemonade, Demand Curve

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26 May 2018
Department
Course
Professor
ECO 305
Prof. Mirhosseini
5 February 2018
Assignment 4
1. The market for lemonade has 10 potential buyers, each having an individual demand
curve P = 101 - 10Qi. Find the market demand curve using algebra. (15 points)
P = 101 10Qi
10Qi = 101 P
Qm = Market quantity = 10x (10*1- 1P)
P=101 Qm
2. Draw an individual demand curve and the market demand curve in the same
graph. (15 points)
3. What is the quantity demand by each consumer and in the market as a whole when
lemonade is priced at P=$1/cup? (15 points)
Individual Demand at P=1 10 cups
Market Demand at P=1 100 cups
4. a) For the demand curve P=60-0.5Q find the elasticity at P=10. (15 points)
P = 60 - .5Q
= -2*10 / 100 = -0.2
5. b) If the demand curve shifts parallel to the right, what happens to the elasticity at
P=10? (10 points)
0
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020 40 60 80 100 120
Price
Quantity
Individual Demand
Market Demand
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Document Summary

Assignment 4: the market for lemonade has 10 potential buyers, each having an individual demand curve p = 101 - 10qi. Find the market demand curve using algebra. (15 points) Qm = market quantity = 10x (10*1- 1p) P=101 qm: draw an individual demand curve and the market demand curve in the same. Quantity: what is the quantity demand by each consumer and in the market as a whole when lemonade is priced at p=/cup? (15 points) Market demand at p=1 100 cups: a) for the demand curve p=60-0. 5q find the elasticity at p=10. (15 points) = -2*10 / 100 = -0. 2: b) if the demand curve shifts parallel to the right, what happens to the elasticity at. P stays the same and the q increases but the slope stays the same, therefore, elascticy decreases if the demand curve shifts to the right: consider the demand curve q=100-50p.

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