There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...

Question

Question

There are two consumers in the economy, Will and Kyle. Wills demand for bananas is Qw(p) = 20 – 2P. Kyles is Qk(p) = 20 – 0

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

a) Will's demand curve is Q_W=20-2P

when P=$3, Q_W=20-(2*3) = 14 units

Now, dQ_W/dP = -2

Then, Will's price elasticity of demand = P/Q_W * (dQ_W/dP) = 3/14 * (-2) = -0.43

Kyle's demand curve is Q_K=20-0.5P

when P=$3, Q_K=20-(0.5*3) = 18.5 units

Now, dQ_K/dP = -0.5

Then, Kyle's price elasticity of demand = P/Q_K * (dQ_K/dP) = 3/18.5 * (-0.5) = -0.08

Thus, price elasticity of demand depends on the slope of the demand curve.

b) Market demand curve for bananas = Q =Q_W+Q_K = 20-2P+20-0.5P = 40-2.5P

c) When P= $3, Q=40-(2.5*3) = 32.5 units.

Now, dQ/dP=-2.5

Then, price elasticity of market demand = P/Q*(dQ/dP) = 3/32.5*(-2.5) = -0.23.

Elasticity of market demand lies in between Will's and Kyle's elasticity of demand for bananas.

Add a comment

Answer 2

Similar Homework Help Questions

There are only two groups of consumers in a particular market. Let the demand curve of...

There are only two groups of consumers in a particular market. Let the demand curve of consumers in group 1 be given as q = f(p) and the demand curve of consumers in group 2 be given as q g(p), where Q+ and p is the market price of the good. Question: Derive a mathematical expression that shows how the price elasticity of the market demand curve, , is related to the price elasticities of the two groups' demand curves,...
Suppose you have 2 consumers in the market with the following demand curves: x1=40-2p and x2=...

Suppose you have 2 consumers in the market with the following demand curves: x1=40-2p and x2= 50-1/2P a) Draw the inverse demand curve for these two consumers, on the same graph, with x on the horizontal and p on the vertical axis. Do this on the left hand side of the space below, leaving yourself room to add a second graph on the right. Numerically mark both y-intercepts and x-intercepts. b) Next to the original graph of the individual demand...
2. Find the price elasticity when p10; p-20 and p-30 for the following demand curve: P...

2. Find the price elasticity when p10; p-20 and p-30 for the following demand curve: P 40-1Q 4 a. Remember that the price elasticity formula is: Ed Illustrate the demand below. Now illustrate the price elasticities found above. Do not forget to label your axis b. and points. c. Interpret the price elasticity when the price is 10.

Problem Set 1 Due Date: Wednesday, January 25,2017 1. Consider the following demand function of an...

Problem Set 1 Due Date: Wednesday, January 25,2017 1. Consider the following demand function of an individual for good 1: where p" p2, ps are the prices of good 12, and 3, respectively, and Y represents the income the individual. Suppose good 1 and 2 are substitutes while good 1 and 3 are complements. (a) Describe in words what B,,B,, B, and B, measure. (b) Can you say anything about the expected signs of p.B.B, and B, in the demand...
1. Elasticities Consider the following supply and demand functions qD12-3p s3+2p a) Plot the supply and...

1. Elasticities Consider the following supply and demand functions qD12-3p s3+2p a) Plot the supply and demand function:s b) What are the equilibrium price and quantity? c) At the equilibrium price and quantity, what is the price elasticity of demand? d) Interpret the price elasticity of demand. How much will quantity change if the price increases by 1%? e) Suppose I were to calculate an income elasticity of ξ 0.5. What does this imply about the good in our market?...
Avi and Maya are the only two consumers in an economy. Avi’s demand for apples is...

Avi and Maya are the only two consumers in an economy. Avi’s demand for apples is given by the equation xA(p) = 6 − p, where p is the per unit price of apple. Maya’s demand for apples is given by the equation xB (p) = 10 − p. (a) Derive the aggregate demand x(p) = xA(p)+xB(p). Draw the aggregate demand where price of apples is on the vertical axis and the aggregate quantity consumed is on the horizontal axis....

A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under...

A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under 65 and senior citizens. The monopolist's marginal oost is MC = 0.05q, where q is the total output in both markets. The marginal cost does not depend on the market in which the goods are sold. The demand curves are Adults: PA-25-1/6 x QA-25-0.1667 x QA Seniors: PS = 15-⅛xQs-15-0.125 x Qs ● . A. What is the total industry demand curve? (Rewrite each...
Consider this equation of a demand curve: Qd = 500 – 2P, where Qp is quantity...

Consider this equation of a demand curve: Qd = 500 – 2P, where Qp is quantity demanded and P is price. a. Find the (QD,P) pair at which the point price elasticity of demand, e, is equal to –1. What is the value of total revenue at this point? b. Where does this QD,P) pair from part (a) sit on the demand curve? Sketch the demand curve and label the point from part (a).
1. Given the demand function Q = 500 - 3P - 2P, +0.01Y where and P...

1. Given the demand function Q = 500 - 3P - 2P, +0.01Y where and P denote quantity and price of the good, Y is income, and price of an alternative good. is the a) If P=20, PA = 30, and Y= 5000, find (i) the price elasticity of demand (ii) the cross-price elasticity of demand (iii) the income elasticity of demand b) If income rises by 5%, calculate the corresponding percentage change in demand, Is the good inferior or...

suppose the demand curve for a product is given by Q=10-2P+Ps1,where P is the price of the product and Ps is the price of a substitute good

suppose the demand curve for a product is given by Q=10-2P+Ps1,where P is the price of the product and Ps is the price of a substitute good. the price of the substitute good is $2.00.a)suppose P=$1.00, what is the price elasticity of demand?what is the cross- price elasticity of demand?b)suppose the price of the good, P, increases to $2.00. Now what is the price elasticity of demand, and what is the cross-prices elasticity of demand?

There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...

Homework Answers

Add Answer to:
There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...

Post as a guest

Earn Coins

There are only two groups of consumers in a particular market. Let the demand curve of...

Suppose you have 2 consumers in the market with the following demand curves: x1=40-2p and x2=...

2. Find the price elasticity when p10; p-20 and p-30 for the following demand curve: P...

Problem Set 1 Due Date: Wednesday, January 25,2017 1. Consider the following demand function of an...

1. Elasticities Consider the following supply and demand functions qD12-3p s3+2p a) Plot the supply and...

Avi and Maya are the only two consumers in an economy. Avi’s demand for apples is...

A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under...

Consider this equation of a demand curve: Qd = 500 – 2P, where Qp is quantity...

1. Given the demand function Q = 500 - 3P - 2P, +0.01Y where and P...

suppose the demand curve for a product is given by Q=10-2P+Ps1,where P is the price of the product and Ps is the price of a substitute good

There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...

Homework Answers

Add Answer to: There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...

Post as a guest

Earn Coins

Add Answer to:
There are two consumers in the economy, Will and Kyle. Will's demand for bananas is Qw(p) = 20 – 2P. Kyle's is Qk(p) =...