5. Suppose the quantity of good X demanded by individual 1 is given by X₁ = 10-2Px + 0.011₁ +0.4Py and the quantity of X demanded by individual 2 is X2 = 5 Px +0.0212 +0.2Py a) What is the market demand function for total X (= X₁+X₂) as a function of Px, I1, I2, and Py. b) Graph the two individual demand curves (with X on the horizontal axis, Px on the vertical axis) for the case I₁ = 1000, I2 = 1000, and Py = 10. c) Using these individual demand curves, construct the market demand curve for total X. What is the algebraic equation for this curve? 2 d) Now suppose I increases to 1100 and I2 decreases to 900. How would the market demand curve shift? How would the individual demand curves shift? Graph these new curves. e) Suppose Py rises to 15. Graph the new individual and market demand curves that would result.
5. Suppose the quantity of good X demanded by individual 1 is given by X₁ = 10-2Px + 0.011₁ +0.4Py and the quantity of X demanded by individual 2 is X2 = 5 Px +0.0212 +0.2Py a) What is the market demand function for total X (= X₁+X₂) as a function of Px, I1, I2, and Py. b) Graph the two individual demand curves (with X on the horizontal axis, Px on the vertical axis) for the case I₁ = 1000, I2 = 1000, and Py = 10. c) Using these individual demand curves, construct the market demand curve for total X. What is the algebraic equation for this curve? 2 d) Now suppose I increases to 1100 and I2 decreases to 900. How would the market demand curve shift? How would the individual demand curves shift? Graph these new curves. e) Suppose Py rises to 15. Graph the new individual and market demand curves that would result.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:5. Suppose the quantity of good X demanded by individual 1 is given by
X₁ = 10-2Px +0.011₁ +0.4Py
and the quantity of X demanded by individual 2 is
X₂ = 5 Px + 0.0212 +0.2Py
a) What is the market demand function for total X (= X₁+X₂) as a function
of Px, I1, I2, and Py.
b) Graph the two individual demand curves (with X on the horizontal axis,
Px on the vertical axis) for the case I₁ = 1000, I2 = 1000, and Py = 10.
c) Using these individual demand curves, construct the market demand curve
for total X. What is the algebraic equation for this curve?
2
d) Now suppose I increases to 1100 and I2 decreases to 900. How would the
market demand curve shift? How would the individual demand curves shift?
Graph these new curves.
e) Suppose Py rises to 15. Graph the new individual and market demand.
curves that would result.
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