Question

4. Ryan and Chris are roommates who both enjoy skiing in Whistler, Canada. Ryan's inverse demand curve for ski days is: P 240 6q, and Chris's inverse demand curve for ski days is P 240 8, where q, is the number of ski trips Ryan takes and qe is the number of trips Chris takes (a) Convert Ryan and Chris's inverse demand curves into “standard demand" curves that state the quantity of trips demanded by each person at any given price (b) If we define Ryan and Chris's house as the total market for ski trips, what is the market demand for ski trips in Whistler? Plot Ryan's demand, Chris's demand, and the market demand curve. (Hint: it may be easier to use inverse demand when you are ready to plot the curves). (c) Suppose that the price of a ski trip is initially po $80. How many trips do Ryan and Chris each demand? What is Ryan's consumer surplus? (d) Due to increased maintenance costs, the price is raised to pi $90. Now how many trips does Ryan demand? What is the change in his consumer surplus?

Answer 1