Question

8. Based on the estimates of Ghose and Han (2014), the demand function for mobile applications at Apple's App Store is qA =1.4p^-2 and the demand function at Google Play is where the quantities are is in millions of apps. What is the total demand function for apps? Total demand for apps as a function of price (p) is qG =1.4p^-3.7, q = ? . (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) If the price for an app is $0.80, what is the equilibrium quantity demanded by Apple customers, Google customers, and all customers? At the price of $0.80, the quantity demanded by Apple customers is million apps, the quantity demanded by Google customers is million apps, and the total quantity demanded is million apps. (Enter your responses rounded to two decimal places.)

Answer 1

We have =>

The demand functions are for Giffin goods which has the positive relationship with price.

the demand function for Apple's App Store is qA =1.4p-2

the demand function for Google Play is  qG =1.4p-3.7

Total demand function (Q) can be determined by the horizontal summation of the two individual demand curves

Q = qA + qG

Q = 1.4p-2 + 1.4p-3.7

Q = 2.8p - 5.7

at p = $ 0.80

the quantity demanded by Apple customers is qA = 1.4*0.8 - 2

= -0.88 million

the quantity demanded by Google customers is qG = 1.4p - 3.7

= 1.4*0.8 - 3.7

= -2.58 million

and the total quantity demanded is Q = 2.8*0.8 - 5.7

= -3.46 million

These are trivial answers. The negative quantities are not feasible.