Feedback on ECON 1001_2010_Week 13_Revision

Feedback on ECON 1001_2010_Week 13_Revision - • P = 100...

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ECON1001 Week 13 Lecture 13 Final Exam: Revision
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Towards Hint: Summation identical demand curves Jerry: P = 3 – 0.25Q J , or Q J = 12 – 4P George: P = 3.5 – 0.5Q J , or Q G = 7 – 2P Market: Q M = Q J + Q G = (12 – 4P) + (7 – 2P) Therefore, Q M = 19 – 6P, for P ≤ 3.00
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Another Example Identical consumers Suppose there are 100 people with identical demand curves given: Q i = 10 – P, for i = 1, …, 100 What is the market demand curve? Q M = 100Q i = 100(10 – P) = 1000 – 100P Or, in terms of price (inverse demand curve) P = 10 – 0.01Q M
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4 Final Exam: Hint Ability to sum individual demand curves is going to help a lot. Example from Mid-semester: Suppose that in a perfectly competitive market there are 60 identical consumers. Each individual’s demand curve is given:
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Unformatted text preview: • P = 100 – 30Q i for i = 1, …, 60 • where P is price, Q is quantity, and i is the representative individual. Also assume there are 60 identical firms. Each firm’s supply curve is given: • P = 10 + 60Q j for j = 1, …, 60 • where j is the representative firm. 5 Final Exam: Hint (a) Derive equations for the market demand and supply curves. Calculate market equilibrium price and quantity. Show these using a carefully labelled 6 7 8 9 10 11 Final Exam: Hint (b) Now suppose the Government imposes a consumption tax of $3 per unit. Calculate the new market equilibrium price and quantity. Show these in a new diagram. 12 13 14 15 16 17...
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