Suppose there are 30 consumers for a good, having identical demand function: d(p)=10-3P for any price less than or equal to 10/3 and d(p)=0 for any price greater than 10/3. Write the market demand function.
Suppose there are 30 consumers for a good, having identical demand function: d(p)=10-3P for any price less than or equal to 10/3 and d(p)=0 for any price greater than 10/3. Write the market demand function.
Suppose there are 30 consumers for a good, having identical demand function: d(p)=10-3P for any price less than or equal to 10/3 and d(p)=0 for any price greater than 10/3. Write the market demand function.
Market demand function is simply a horizontal summation of individual demand functions. Since demand function for all the 30 consumers is identical, we can write market demand simply as ‘individual demand function multiplying by a factor of 30’. Thus: Individual demand function : D(p)= 10-3P Market demand function: Md(p)=10 x 30 – 3 (30)P = 300-90 P.
Suppose there are 30 consumers for a good, having identical demand function: d(p)=10-3P for any price less than or equal to 10/3 and d(p)=0 for any price greater than 10/3. Write the market demand function.
Answers
MANOJ
Market demand function is simply a horizontal summation of individual demand functions. Since demand function for all the 30 consumers is identical, we can write market demand simply as ‘individual demand function multiplying by a factor of 30’.
Thus: Individual demand function :
D(p)= 10-3P
Market demand function:
Md(p)=10 x 30 – 3 (30)P
= 300-90 P.