Individuals A and B are the only consumers of good X. Individual A demand for go
ID: 1207707 • Letter: I
Question
Individuals A and B are the only consumers of good X. Individual A demand for good X is given by: Q = 4 – P and individual B demand for good X is given by: Q = 8 – 2P. The supply for good X is given by MC = 3. Assume good X is a (pure) private good. Good X equilibrium quantity is _______. (NOTE: Write your answer in number format, with 2 decimal places of precision level; do not write your answer as a fraction. Add a leading zero and trailing zeros when needed. Use a period for the decimal separator and a comma to separate groups of thousands. HINT: Sketch the Marshallian “cross” diagram of supply and demand to help you answer this question.) Show all steps.
Explanation / Answer
Q = 8 – 2P
Q = 4 – P
Market demand: P = 4- Q/3
MC = 3
MR = MC
TR: 4Q - Q2/3
MR: 4 - 2Q/3
Q = 1.5