Suppose there are 20 consumers for a good and they have identical demand functions:
Suppose there are 20 consumers for a good and they have identical demand functions:
d(p) = 10 – 3p for any price less than or equal to 10/3 and d1(p) = 0 at any price greater than 10/3. What is the market demand function?
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d(p) = 10 - 3p if p ≤ 10/3
d1(p) = 0 if p > 10/3
Market demand = Summation of demand of all the consumers in the market
For price ≤ 10/3
Market demand = 20∑d(p) (Since consumers have identical demand curve)
= 20 x (10 - 3p)
= 200 - 60p
For price > 10/3
Market demand = 20 x d1(p)
= 20 x 0
= 0
Market demand function = 200 - 60p{if p ≤ 10/3, if p > 10/3
= 0
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