York University - ECON2350 - V. Bardis Practice Set 1 1. Find the aggregate demand function, X ( p ), if the demand of person 1 is given by x 1 = 50-p and the demand of person 2 is given by x 2 = 25-(1 / 2) p . Is any of the three demands more elastic than the others? 2. Suppose the demand function of person 1 is given by x 1 = 50-p and that of person 2 by x 2 = 25-p . (a) Find each person’s inverse demand function. (b) Find the aggregate demand function, X ( p ). 3. (a) Find the aggregate demand function, X ( p ), in a market with two price-taking consumers: person 1 with income m 1 and demand x 1 = M 1 /p and person 2 with income M 2 and demand x 2 = M 2 / 3 p . (b) Show that the three demands have unitary price elasticity. (c) Find the income elasticity of person 1’s and person 2’s demand. (d) Other things equal, do you expect the price of the good to become lower or higher if we take half the income of person 1 and give it to person 2? 4. (a) Find the aggregate demand,
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