Suppose the market for cars has two segments, businesses and home users. The demand curve for cars by businesses is P = 40 – 4Qb, where Qo is the quantity of cars de- manded by businesses with the price is P. The demand curve for cars by home users is P = 24-2Qh, where Qh is the quantity of cars demanded by home users when the price is P. Both businesses and home users will never demand negative amounts of cars, so for sufficiently high prices, the demand will be 0. (a) Graph the demand curves for each segment, and draw the market demand curve for cars. (b) Write the equation for the demand curve for all prices P > 0 (make sure that it matches with part (a)). (c) When the price is P = $12, what is the consumer surplus for businesses, home users, and the market as a whole.
Suppose the market for cars has two segments, businesses and home users. The demand curve for cars by businesses is P = 40 – 4Qb, where Qo is the quantity of cars de- manded by businesses with the price is P. The demand curve for cars by home users is P = 24-2Qh, where Qh is the quantity of cars demanded by home users when the price is P. Both businesses and home users will never demand negative amounts of cars, so for sufficiently high prices, the demand will be 0. (a) Graph the demand curves for each segment, and draw the market demand curve for cars. (b) Write the equation for the demand curve for all prices P > 0 (make sure that it matches with part (a)). (c) When the price is P = $12, what is the consumer surplus for businesses, home users, and the market as a whole.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
plzz help me in all subparts
Transcribed Image Text:3. Suppose the market for cars has two segments, businesses
and home users. The demand curve for cars by businesses
is P =
40 – 4Qb, where Qb is the quantity of cars de-
manded by businesses with the price is P. The demand
curve for cars by home users is P = 24–2Qh, where Qh is
the quantity of cars demanded by home users when the
price is P. Both businesses and home users will never
demand negative amounts of cars, so for sufficiently high
prices, the demand will be 0.
m
(a) Graph the demand curves for each segment, and
draw the market demand curve for cars.
(b) Write the equation for the demand curve for all
prices P > 0 (make sure that it matches with part
(a)).
(c) When the price is P = $12, what is the consumer
surplus for businesses, home users, and the market
as a whole.
Tev
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 6 images
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education