market demand and elasticity-ho

# market demand and elasticity-ho - Market Demand Demand...

This preview shows pages 1–7. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Market Demand Demand Elasticity Elasticity & Revenue Market Demand cont. Chapter 15 Market Demand Demand Elasticity Elasticity & Revenue Outline Deriving market demand from individual demands How responsive is q d to a change in price? (elasticity) What is the relationship between revenue and demand elasticity? Market Demand Demand Elasticity Elasticity & Revenue Clicker Vote When deriving market demand from individual demand curves, we add them up A) Vertically B) Diagonally C) Horizontally D) It depends Market Demand Demand Elasticity Elasticity & Revenue From Individual Demands to Market Demand Let the (inverse) demand of agent 1 and agent 2 be P ( q 1 ) = 20- q 1 P ( q 2 ) = 5- q 2 2 Cats Price D 1 (p) Demand of Agent 1 20 20 Cats Price D 2 (p) Demand of Agent 2 10 5 Market Demand Demand Elasticity Elasticity & Revenue From Individual Demands to Market Demand To find market (total) demand, we must fix the price and add up the quantities. Easier to do with demand , as opposed to inverse demand . D 1 ( p ) = max { 20- p , } D 2 ( p ) = max { 10- 2 p , } Cats Price D 1 (p) Demand of Agent 1 20 20 Cats Price D 2 (p) Demand of Agent 2 10 5 Market Demand Demand Elasticity Elasticity & Revenue From Individual Demands to Market Demand The market demand is the horizonal sum (for a given p ) of all...
View Full Document

## This note was uploaded on 12/26/2011 for the course ECON 100B taught by Professor Kilenthong during the Fall '08 term at UCSB.

### Page1 / 19

market demand and elasticity-ho - Market Demand Demand...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online