Suppose that the consumers’ demand function for a certain commodity is D(q) = 50 -3q - q^2 dollars per unit.?
Suppose that the consumers’ demand function for a certain commodity is D(q) = 50 -3q - q^2 dollars per unit.
a.Find the number of units that will be bought if the market price is $32 per unit.
b.Compute the consumers’ willingness to spend to get the number of units in part (a).
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A)
P=32
32 = 50-3Q-Q²
Q²+3Q-18=0
Q=3 (another solution is Q= -6 but it should be ignored due to economics specifics in this case)
B)
Willingness to pay (to spend) for next unit is negative, but for this unit is positive.
Value of third good (willingness to spend) is the same as value of money spent on it, thus equals price.