There are 100 people in Slobovia who like widgets. The individual demand for wid
ID: 1247598 • Letter: T
Question
There are 100 people in Slobovia who like widgets. The individual demand for widgets are:20 people each have a perfectly inelastic demand for 50 widgets
30 people each have a perfectly inelastic demand for 40 widgets
40 people each have a perfectly elastic demand for widgets at at price of $2 per widget
10 people each have a perfectly elastic demand for widgets at a price of $3 per widget
Calculate the market demand curve for widgets and illustrate it graphically.
Explanation / Answer
20*50+30*40=2200 is the number of widgets demanded regardless of price. If the price of widgets is less than or equal to $2, quantity demanded will be 2200+40+10=2250 (since both the people with elastic demand at $2 and $3 are in the market) If the price is greater than $2 and less than or equal to $3, market demand will be 2200+10=2210 (since only the people with elastic demand at $3 are in the market) To find the graph, just put the points above on a set of axis. (It will be vertical at Q=2250 from p=0 to p=2, then there will be a little jump to Q=2210, where it will be vertical from p>2 to p=3 and another jump to Q=2200 where it will be vertical from p>3 to infinity) (sorry. dont know how to graph here.)
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