Question 2 [18 points] Consider the market for a good in which there are two income groups of buyers. There are 8 buyers
Posted: Wed Jul 06, 2022 6:20 am
Question 2 [18 points] Consider the market for a good in whichthere are two income groups of
buyers. There are 8 buyers with income $100 and 10 buyers withincome $150. All buyers have
the same utility function u = 32q − q2 + m, where q denotes theamount of the good and m the money left after buying the good.Denote the price of the good by p.
(a) [5 points] For each income group, determine the individualdemand of a buyer.
(b) [5 points] Find the market demand and draw the demandcurve.
(c) [4 points] Suppose price p = 10. Consider an individualbuyer in income group $100.
Determine at this price how much money is left with the buyerafter buying the good.
(d) [4 points] Suppose price p = 12. Consider an individualbuyer in income group $150.
Determine at this price how much money is left with the buyerafter buying the good.
buyers. There are 8 buyers with income $100 and 10 buyers withincome $150. All buyers have
the same utility function u = 32q − q2 + m, where q denotes theamount of the good and m the money left after buying the good.Denote the price of the good by p.
(a) [5 points] For each income group, determine the individualdemand of a buyer.
(b) [5 points] Find the market demand and draw the demandcurve.
(c) [4 points] Suppose price p = 10. Consider an individualbuyer in income group $100.
Determine at this price how much money is left with the buyerafter buying the good.
(d) [4 points] Suppose price p = 12. Consider an individualbuyer in income group $150.
Determine at this price how much money is left with the buyerafter buying the good.