Purchase Solution

Analyzing the effect of price changes on purchasing

Not what you're looking for?

Ask Custom Question

Consider two investors (A and B) with the following demand curve for a stock:

A: p=100-q
B: p=150-2q

a) At a price of $50, how much will A and B purchase?

b) If the price falls to $30, who will increase their holdings more?

c) On this basis, which investor seems to be more overconfident?

Purchase this Solution

Solution Summary

The solution analyzes the effect of price changes on purchasing.

Solution Preview

a) At a price of $50, how much will A and B purchase?

A: p=100-q

For p=$50,
50=100-q
q=50

B: p=150-2q

For p=$50,
50=150-2q
q=50

Both will buy 50 units.

b) If the price falls to $30, who will increase their holdings more?

Elasticity of ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Introduction to Finance

This quiz test introductory finance topics.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.