Question 28 Not yet answered Nobody wants more than two. There are 60 Type A dem

Question

Question 28 Not yet answered Nobody wants more than two. There are 60 Type A demanders and 40 Type B demanders. Type A Points out of 1.00 P Flag question to have two widgetts. If the price of widgetts is $7, how many widgett will be demanded in total? There are 100 demanders in the widgett market. Demanders can choose to buy zero, one, or two widgetts. demanders are willing to pay up to $14 for a widgett and are willing to pay a total of $21 to have two widgetts. Type B demanders are willing to pay up to SA0 for their first widgett and are willing to pay up to $16 Select one: a. 100 b. 140 O c.200 d. 160 e. 120

Explanation / Answer

Total type A demanders = 60

Type B demanders = 40

If the price of widgets = $7 , then type A demands 2 widgets because there willingness to pay for 2 widgets is not less than price . Therefore , 60 type A demanders demand 2 widgets = 60(2) = 120 widgets.

And Type B demands only 1 widget because for 2nd widget , MWP = $6 which is less than price of $7. Therefore , total demand by type B demanders = 40(1) = 40 widgets.

Hence , the total demand of widgets at price = $7 is (120+40) = 160 widgets

Widgets Marginal willingness to pay ( MWP of type A) Marginal Willingness to pay (MWP of type B) 0 - - 1 $14 $10 2 $7 $6

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