Question

Suppose there are two consumers in the market for a good and their demand functions are as follows:

$d_1\left(p\right)=20-p$ for any price less than or equal to 20 and $d_1\left(p\right)=0$ at any price greater than 20.

$d_2\left(p\right)=30-2p$ for any price less than or equal to 15 and $d_1\left(p\right)=0$ at any price greater than 15.

Find out the market demand function.

Answer 1

In the given demand functions, both the consumers do not want to demand the good for any price above Rs. 15. Both of them demand it only at a price less than or equal to Rs. 15. Therefore, market demand will be

$\left(p\right)=d_1\left(p\right)+d_2\left(p\right)$

$\left(p\right)=20-p+30-2p$

$\left(p\right)=50-3p$

for any price less than or equal to 15.

Market demand = 0 at any price greater than 15.