Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) = 4 demand for the second consumer group is d₂ (p) = demand for the third consumer group is d3 (p) 60-3p if p < 20 0 otherwise 100-2p 0 if p < 50 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d₂ (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)?

Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) = 4 demand for the second consumer group is d₂ (p) = demand for the third consumer group is d3 (p) 60-3p if p < 20 0 otherwise 100-2p 0 if p < 50 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d₂ (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 6MC

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