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ECON 101: Principles of Microeconomics – Discussion Section Week 2 – Spring 2015 TA: General Information Teaching Assistant: Email: Office: Office Hours: 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 1 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 1 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 2 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. 3