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Assume that a consumer's INDIVIDUAL water demand is given by the following equation: P = 80 - 2Q where P = price per 1000 gallons
Assume that a consumer's INDIVIDUAL water demand is given by the following equation: P = 80 - 2Q where P = price per 1000 gallons ($/1000g) Q = quantity of water in units of 1000 gallons (10 pts) Now let's calculate and illustrate a MARKET demand function for water over the entire community. We will assume that the individual demand function above is representative of ALL other individual water demands in the community. For simplicity let's assume the community consists of 5 individuals, and that for now the price offered to the community is again $0 per 1000g. Show and illustrate how you derive (calculate) the AGGREGATE demand from the individual demands. And for this aggregate demand calculate (a) the quantity (Q*) of water this community would together optimally choose, (b) the marginal value received for at this quantity, and (c) the total benefit (value) received by the community. a. Q = 1000 gallons b. Marginal value at Q* $ dollars per 1000 gallons c. Total benefit = $ dollars
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