Question

Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below.

a. Fill in the table for the missing values.

Price per Candy	Tex Qd	Dex Qd	Rex Qd	Total Quantity Demanded
$10	2	3	2
9	4	4		14
8		5	10	21
7	8		14	28
6	10	7	18

b. (i) Which buyer demands the least at a price of $7?  (Click to select)  Rex  Tex  Dex  

(ii) Which buyer demands the most at a price of $9?  (Click to select)  Rex  Dex  Tex  

c. Which buyer’s quantity demanded increases the most when the price is lowered from $9 to $8 (in absolute terms)?  (Click to select)  Tex  Dex  Rex  

d. (i) Which direction would the market demand curve shift if Tex withdrew from the market?  (Click to select)  Right  Left  No change  

(ii) Which direction would the market demand curve shift if Dex doubled his purchases at each possible price?  (Click to select)  Right  No change  Left  

e. Suppose that at a price of $8, the total quantity demanded increases from 21 to 31. Is this a "change in the quantity demanded" or a "change in demand"?  (Click to select)  Change in demand  Change in the quantity demanded

Answer 1

(a)

Total quantity demanded = Tex Qd + Dex Qd + Rex Qd

Price per Candy	Tex Qd	Dex Qd	Rex Qd	Total Quantity Demanded
$10	2	3	2	2 + 3 + 2 = 7
9	4	4	14 - 4 - 4 = 6	14
8	21 - 5 - 10 = 6	5	10	21
7	8	28 - 8 - 14 = 6	14	28
6	10	7	18	10 + 7 + 18 = 35

(b)

(i) Dex (When Price = $7, Qd is lowest (= 6) for Dex)

(i) Rex (When Price = $9, Qd is highest (= 6) for Rex)

(c) Rex

When Price dropped from $9 to $8,

Rise in Qd, Tex = 6 - 4 = 2

Rise in Qd, Dex = 5 - 4 = 1

Rise in Qd, Rex = 10 - 6 = 4

(d)

(i) Left

A fall in number of consumers will lower market demand, shifting demand curve to left.

(ii) Right

An increase in purchase by one consumer will increase market demand, shifting demand curve right.

(e) Change in demand