Market demand in situation 1 _ Income = 55 Income = 55 Income = 55 Income = $5 Income = 55 Income = $30 A A A A Individual Individual G=sum A to Individual _ _ Individual _ _ Individual { _ _ _ quantities _ _ quantities _ _ F) Consumables Price quantities quantities quantities purchased purchased Market purchased by purchased by purchased by by classmate by Demand me classmate 2 classmate 4 _ 1 _ _ classmate 3 _ Can of coke _ $1 1 1 1 1 5 Snicker bar _ $1 2 2 2 2 2 10 Twinkee _ $1 1 1 D D D 2 Carton of milk _ $1 1 2 2 2 1 8 Market demand in situation 2 _ Income = 55 Income = 55 Income = 55 Income = 55 Income = 55 Income = $30 A A A I d' 'd I A I d' 'd I G (A t n M ua n W! ua =sum 0 Individual _ _ Individual _ _ Individual _ _ _ quantities _ _ quantities _ _ F) Consumables Price quantities quantities quantities purchased purchased Market purchased by purchased by purchased by by classmate by Demand me classmate 2 classmate 4 _ 1 _ _ classmate 3 _ Can of coke _ $1 1 1 1 1 5 Snicker bar _ $2 2 1 2 D D 5 Twinkee _ $1 1 1 D D D 2 Carton of milk . $1 1 2 2 2 1 8 Market demand in situation 2 :Income = $8 :income = 58 :Income = $8 :Income = 58 :Income = 58 :Income = $40 A A A I d' 'd l A l d' 'd l G (A t n WI ua n av: ua =sum 0 Individual _ _ Individual _ _ Individual _ _ _ quantities _ _ quantities _ _ F) Consumables Price quantities quantities quantities purchased purchased Market purchased by purchased by purchased by by classmate by Demand me classmate 2 classmate 4 _ 1 _ _ classmate 3 _ Can of coke _ S1 2 3 2 2 2 ' 11 Snicker bar _ $2 2 3 3 2 2 ' 12 Twinkee _ $1 1 1 1 1 1 ' 5 Carton of milk _ $1 2 3 2 2 2 ' 11 A- Based on the above data, develop a demand curve for Snickers bars (remember that a marketdemand curve is simpiy the summation of individual demands at various prices). 5 Compute the price elasticity of demand for Snickers Bars. Percentage change in quantity demanded And what does that teil us? E1: "' _ _ " ' ' Percentage chalnge in mcome C. Examine specifically how the market quantities of Snickers Bars changed when income increased. Graph this new point (comparing situations 1 and 3). An increase inincome leads to a shift in demand (in our case since we have only one point on our new demand curve, we'llassume that it is a parallel shift). Draw the new demand curve beiow. D Compute the income eiasticity for Snickers Bars. Percentage change in quantity demanded of X Ex}, = _.__...._ Percentage change in price of Y And what does this tell us? Compute the crossprice elasticity of demand for the other goods, and drawr the appropriate curves on the graphs below. TWINKIES 3U 26 23 IS 20 22 24 If: Quantity;r 3|] 16 18 20 22 24 14 lo 18 20 22 24 26 23 30 14 And what do the graphs tell us
