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Homework # 1
Week 1
Due Thursday
7 Oct
A Simple Demand Curve
• Suppose that a consumer’s demand is given by
– Quantity Demanded (Qd) = 110 – 1*Price
• Compute and graph the demand curve for prices from 0 to 100
[P{0:110}] in 10 increments
• If a supplier can only charge the same (1) price for all units sold,
what is the total revenue (P* Qd) at each price,{0:110})
• At P = 50
– What is the consumer’s quantity demanded, how much (in total) did
he/she have to pay for it?
– How much would the consumer have paid if the supplier could have
charged different prices equal to the consumer’s maximum willingnessto-pay for each block of 10 units (e.g., 10, 20, 30, 40, 50) up to 50 units?
– Graphically show a) what the consumer did pay and b) what they would
have been willing to pay
• What is the slope of this demand curve? What is the
economic interpretation of the slope?
Hints
• See slide 12 in lecture_01.2b