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Market surveys show that there are two types of consumers for frozen yogurts. The first type like frozen yogurt and have an inverse demand of
Market surveys show that there are two types of consumers for frozen yogurts. The first type like frozen yogurt and have an inverse demand of jQuery20002909350922541556_1524742159851?? = 5 − ????. The second type are crazy about frozen yogurt and have an inverse demand of ???? = 20 − ????. In the town of Smallville there are only 2 consumers: one of them likes frozen yogurt and the other is crazy about it.
a) Derive the market demand function for frozen yogurt in Smallville and plot the market demand curves. (3 marks)
b) Suppose that the market supply for frozen yogurt in Smallville is given by ???? = 2 + ????. Find the equilibrium price and quantity. How much does each consumer buy at the equilibrium price? (2 marks)
