Question

Suppose there are two consumers in the market for a good and their demand functions are as follows. d1(p) = 20 − p for any price less than or equal to 20 and d1(p) = 0 at any price greater than 20. d2(p) = 30 − 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15. Find out the market demand function.

Answer 1

Answer:

d(p) = 10 - 3p if p ≤ 10/3 d1(p) = 0 if p > 10/3 Market demand = Summation of demand of all the consumers in the market For price ≤ 10/3 Market demand = 20∑d(p) (Since consumers have identical demand curve) = 20 x (10 - 3p) = 200 - 60p For price > 10/3 Market demand = 20 x d1(p) = 20 x 0 = 0 Market demand function = 200 - 60p{if p ≤ 10/3, if p > 10/3 = 0