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

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26 May 2018
School
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 ā 10Qi
10Qi = 101 ā P
Qm = Market quantity = 10x (10*1- 1P)
P=101 ā 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 ā 10 cups
Market Demand at P=1 ā 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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