Answer:
Explanation:
Hugh p= 480 - 48Qh
Frank p= 80 - 8Qf
Louis p= 20 - 2Ql
1. price of an ounce of gold = $20
Hugh will demand: 20 = 480 - 48Qh; Qh = 460/48 = 9.58 ounce
Frank will demand: 20 = 80 - 8Qf; Qf = 60/8 =7.5 ounce
Louis will demand: 20 = 20 - 2Ql; Ql = 0 ounce
Total demand = 9.58+7.5+0=17.08 ounce
2. quantity demanded of gold in this market is 16.50
Hugh Demand function: p=480-48Q
, Q=10-p/48
Frank Demand function: p=80-8Q
, Q= 10-P/8
Lius Demand function: p=20-2Q
, Q= 10-p/2
Hugh will demand 0 quantity at , p=480-48*0 = $480
Frank will demand 0 quantity at , P=80-8*0 = $80
Lius will demand 0 quantity at , p=20-2*0 = $20
So when Price is between 80 to 480 only Hugh will participate in market. The demand function will be Q= 10-P/48
When Price is between 20 to 80 only Hugh and Frank will participate in market. The demand function will be Q=10-p/48 + 10-P/8 = 20-7p/48
When Price is between 0 to 20 all three will participate in market. Hence demand function will be Q=20 - 7p/48 + 10 - p/2 = 30 - 31p/48
When Demand is 16.5 ounce and if Price is between 80 to 480, then 16.5=10-P/48
P/48=-6.5
This is not possible
When Demand is 16.5 ounce and if Price is between 20 to 80, then
16.5=20-7p/48
7p/48 = 20-16.5
p = 48*3.5/7 = $24
Market price of an ounce of gold must be $24
