ECO 305 Lecture Notes - Lecture 4: Lemonade, Demand Curve
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)
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Price
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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.