Question

Suppose you are given the following demand curves: Q = 32 – (P/3) and Q = 16 - (P/2). Add these two demand curves vertically and find the market demand curve.

Answer 1

Answer : For 1st demand function :

Q = 32 - (P/3)

=> P/3 = 32 - Q

=> P = (32 - Q) * 3

=> P = 96 - 3Q

For 2nd demand function :

Q = 16 - (P/2)

=> P/2 = 16 - Q

=> P = (16 - Q) * 2

=> P = 32 - 2Q

Now by adding these two demand functions vertically we get,

P = 96 - 3Q

+    P = 32 - 2Q

-----------------------------------

2P = 128 - 5Q

=> P = (128 - 5Q) / 2

=> P = 64 - 2.5Q

Therefore, here the market demand curve is, P = 64 - 2.5Q .