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Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) = 4 demand for the second consumer group is d₂ (p) = demand for the third consumer group is d3 (p) 60-3p if p < 20 0 otherwise 100-2p 0 if p < 50 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d₂ (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)?

Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) = 4 demand for the second consumer group is d₂ (p) = demand for the third consumer group is d3 (p) 60-3p if p < 20 0 otherwise 100-2p 0 if p < 50 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d₂ (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) demand for the second consumer group is d2 (p) demand for the third consumer group is d3 (p) = = 60-3p 0 if p < 20 otherwise 100-2p if p < 50 0 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d2 (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)? 6. If the good is sold at a per-unit price of p = 30, what is the (aggregate) consumers' surplus and how is consumption split between the three groups of consumers? 7. If the good is sold at a per-unit price of p = 10, what is the consumers' surplus and how is it split between the three groups?
Transcribed Image Text:Exercise 5: Aggregate Demand and Consumers' Surplus There are three types of consumers. Demand for the first group of consumer is d₁ (p) demand for the second consumer group is d2 (p) demand for the third consumer group is d3 (p) = = 60-3p 0 if p < 20 otherwise 100-2p if p < 50 0 otherwise 200-5p 0 if p < 40 otherwise 1. Find the aggregate demand function, D(p) = d₁ (p) + d2 (p) +d3(p). 2. Draw the graph of the aggregate demand function D(p) and clearly mark all important points. Follow the convention in economics and put quantity on the horizontal axis and price on the vertical axis. 3. For the aggregate demand function, D(p), that you found in part 1, find the corresponding inverse aggregate demand function, P(Q). 4. What is the marginal social value of the 90-th unit of the good, MSV (90)? 5. What is the social value of Q = 90 units of the good, SV (90)? 6. If the good is sold at a per-unit price of p = 30, what is the (aggregate) consumers' surplus and how is consumption split between the three groups of consumers? 7. If the good is sold at a per-unit price of p = 10, what is the consumers' surplus and how is it split between the three groups?
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