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1.3 Exercise 3 The aggregate demand for a good is the sum over two groups of consumers. Group i's demand is denoted Di, with i
1.3 Exercise 3 The aggregate demand for a good is the sum over two groups of consumers. Group i's demand is denoted Di, with i = 1,2. The demand functions are respectively equal to Q1 = D.(p) = max{0, b - ap} and Q2 = D1(P) = max{0, d-cp}, where a, b, c, d are positive parameters and p is the price. Question 1. Compute the consumer surpluses S1 and S2 for the two groups and the total consumer surplus S(Q). Question 2. There are n identical firms supplying the good on the mar- ket, with a total cost function C(q) = F +7 for all q> 0 (and C(O) = 0), where F and y are nonnegative parameters. Compute the global surplus W on this market as a function of total production Q and the model's param- eters
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