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ECON 101: Principles of Microeconomics – Discussion Section Week 2 – Spring 2015
TA:
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Content for Today
Determinants of Demand
Demand Aggregation
Questions
A) Determinants of Demand:
Consider the case of Five Guys at State Street. They know that they face a
downward sloping demand for regular cheeseburgers. The manager hires you
predict the following scenarios. It is always a good Idea to make a graph of each
of questions.
1) The reduction of the price in cheeseburgers will lead to a downward
movement on the demand curve of cheeseburgers.
2) A blizzard that forces some students to stay at home will lead to
(increase at any given price) a right shift of the demand curve of
cheeseburgers
3) A new campaign for weight loss identify cheeseburgers to be very
unhealthy food, this advertisement will lead to a left shift of (decrease
at any given price) the demand curve of cheeseburgers.
4) The price of French fries decreases, this will lead to to a right shift
(increase at any given price) of the demand curve of the demand of
cheeseburgers
5) The price of Wendy’s cheeseburgers decreases, this will lead to a left
shift of (decrease at any given price)the demand curve of cheeseburgers
True or False: Identify all the sentences that are false with your Micro tools.
John Lennon and Paul McCartney are planning to give a concert next month in
London. This implies that at any given price the flight tickets to London will be
more demanded. Knowing that there will reach the maximum of capacity before
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ECON 101: Principles of Microeconomics – Discussion Section Week 2 – Spring 2015
TA:
fulfilling the demand the manager of British airways decided to increase the price
of the ticket, so their demand quantity will be reduced. This will also reduce at
any given price the demand of United Airlines.
Note that it is true that at any given price the flight tickets to London will be more
demanded. It is also true that to reduce the demand the firm can increase the price
of the ticket. However it is FALSE that the previous measure will decrease the
demand of United Airlines
B) Demand Aggregation
I)
Consider the following table that shows the quantity demanded at
different prices of Donuts.
Price of Donut Homer
Lisa
Bart
1.00
2.00
6
5
5
4
3.00
4.00
5.00
6.00
4
3
2
1
5
3
1
0
0
0
3
2
1
0
Market
Demand
16
12
8
5
3
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a) Complete the table for the market demand.
b) Get the equations of individual demands, assuming they are linear.
Homer: q=7-P 0<=P<=7, q=0 if P>=7 Lisa: q=7-2P if 0<=P<3.5 q=0 if P>=3.5 Bart:
q=6-p if 0<=P<6 q=0 if P>=6
c) If you want to graph the market demand, how many kink points the market
demand will have? Why?
The Market demand will have 2 kink points. This is true because there are three
different prices at which they decide to not buy anything while some other do.
d) Get the market demand equation?
Q=
20-4P if 0<=p<3.5
13-2P if 3.5<=P<6
7-P if 6<=P<7
0 if
P=>7
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ECON 101: Principles of Microeconomics – Discussion Section Week 2 – Spring 2015
TA:
II)
The following equations describe consumption of brats in Wisconsin on
a given day. The first equation represents the male population, the
second one represents the female population.
P=100-1/4q1
P=125-1/2q2
a) Side to side graph both demand curves.
b) Get the market demand equation and graph it next to the others.
c) What would happen to the kink in the market demand if the female
demand changed to P=100-1/4q2?
The Kink will disappear because they will start on the same price.
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