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Perfect competition Market surveys show that there are two types of consumers for frozen yogurt. The...

Perfect competition
Market surveys show that there are two types of consumers for frozen yogurt. The first type
like frozen yogurt and have an inverse demand of P1(q) = 12 − q; the second type are crazy
about yogurt and have an inverse demand of P2(q) = 18 − q. In the town of Smallville there
are only 2 consumers: one of them likes frozen yogurt and the other is crazy about frozen
yogurt.


(a) Determine and plot the market demand for yogurt in Smallville.

(b) Find the equilibrium price and quantity. How much does each consumer buy at the
equilibrium price? Determine the surplus of each type of consumers.

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