Market surveys show that there are two types of consumers for frozen yogurt. The first type
 like frozen yogurt and have an inverse demand of P1(q) = 12  q; the second type are crazy
 about yogurt and have an inverse demand of P2(q) = 18  q. In the town of Small Ville there
 are only 2 consumers: one of them likes frozen yogurt and the other is crazy about frozen
 yogurt.

 

(a) Determine and plot the market demand for yogurt in Small Ville.

(b) Find the equilibrium price and quantity. How much does each consumer buy at the
equilibrium price? Determine the surplus of each type of consumers.

Answer rating: 100% (QA)

a To determine the market demand for yogurt in Small Ville we need to sum up the individual demands ... View the full answer