Suppose that three consumers are in the market for good X.Consumer 1's (inverse)demand is P_X = 40 − Q_X; Consumer 2's (inverse)demand is P_X = 50 − 2Q_X; and Consumer 3's (inverse)demand is P_X = 70 − 4Q_X.When P_X = $20,the market will demand: A) 41 units. B) 47.5 units. C) 19.5 units. D) None of the preceding statements is correct.

Question

Quizplus · Accepted Answer

To find the market demand, we need to add up the individual quantities demanded by each consumer at the given price of $20: QD = Q_X + Q_X + Q_X QD = (40 - 20)/(1 + 0) + (50 - 2(20))/(1 + 0) + (70 - 4(20))/(1 + 0) QD = 20/1 + 10/1 + 10/1 QD = 40 Therefore, the market demand at a price of $20 is 47.5 units, so the correct answer is B.

Suppose That Three Consumers Are in the Market for Good