Question

Suppose the market was made up of two demanders. Demander 1 has a demand function given by: qp = 100 - 2P. Demander 2 has a demand function given by: qp = 250 - 4P. The horizontal summation of these two demand functions will, when graphed, have a kink (point where the slope changes). Determine the price associated with the kink in the total demand function. (Do not include a dollar sign in your response. Round to the nearest 2 decimal places if necessary.) Answer: Check

Answer 1

Answer 1. 50

Reason- When price is above 50, demander 1 will not demand anything. Only demanded 2 will demand. So the kink is at P=50.

Answer 2. 0.2

reason- qd*10=10(20-0.5P)=200-5P

P=1/5(200-Q)= 40-0.2Q

Answer 3. 294

reason- when P=10, Qd=72-3*10=42

When Q=0,P=72/3=24

Consumer surplus is the area below the demand curve and above price level.

CS=0.5(24-10)(42)= 0.5*14*42= 294

Answer 4. $142

Reason-when q=0, p=15.2

when p=2, q=66

When P=$2

CS=0.5(66)(15.2-2)=$435.6

when p=0

CS=0.5(76)(15.2)=$577.6

change in CS=$577.6-$435.6=$142

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