1. A market consists of two individuals. Their demand equations are Q1 = 16-4P and Q2 = 20-2P respectively.
a. What is the market demand equation?
b. At a price of $2, what is the point price elasticity for each person and for the market?
The market demand is the sum of two individual demand functions:
Q = 36 - 6P.
At price $2
Q1 = 16 - 4x2 = 8
Q2 = 20 - ...
The solution calculates the elasticity of demand for the scenario given.