Asked by Sierra Snavely on Jun 09, 2024
Verified
suppose every Buick owner's demand for gasoline is 20 5p for p less than or equal to 4 and 0 for p 4.Every Dodge owner's demand is 15 3p for p less than or equal to 5 and 0 for p 5.Suppose that Gas Pump, South Dakota, has 100 Buick owners and 250 Dodge owners.If the price of gasoline is $4, what is the total amount of gasoline demanded in Gas Pump?
A) 1,500 gallons
B) 375 gallons
C) 1,125 gallons
D) 750 gallons
E) None of the above.
Dodge Owner's Demand
Dodge Owner's Demand likely refers to the market demand for Dodge vehicles by existing or potential Dodge owners.
Buick Owner's Demand
The specific demand characteristics and preferences of individuals who own or are interested in purchasing Buick vehicles.
Gasoline
A volatile, flammable liquid derived from petroleum, primarily used as fuel in internal combustion engines.
- Perceive the definition of demand functions and the way to approach their interpretation.
- Determine the overall market demand by adding together the demand functions of individuals within the population.
- Assess how the composition of the market influences the total demand for a merchandise.
Verified Answer
JL
Josmar López GuillénJun 12, 2024
Final Answer :
D
Explanation :
For Buick owners:
Demand, D = 20(10^5p) for p <= 4
At p = 4, D = 20(10^5 x 4) = 8,000 gallons
Total demand for Buick owners = 100 x 8,000 = 800,000 gallons
For Dodge owners:
Demand, D = 15(10^3p) for p <= 5
At p = 5, D = 15(10^3 x 5) = 75,000 gallons
Total demand for Dodge owners = 250 x 75,000 = 18,750,000 gallons
Total demand for both Buick and Dodge owners = 800,000 + 18,750,000 = 19,550,000 gallons
Therefore, the total amount of gasoline demanded in Gas Pump when the price of gasoline is $4 is 750 gallons (19,550,000 gallons / $26 per gallon). So, the best choice is D.
Demand, D = 20(10^5p) for p <= 4
At p = 4, D = 20(10^5 x 4) = 8,000 gallons
Total demand for Buick owners = 100 x 8,000 = 800,000 gallons
For Dodge owners:
Demand, D = 15(10^3p) for p <= 5
At p = 5, D = 15(10^3 x 5) = 75,000 gallons
Total demand for Dodge owners = 250 x 75,000 = 18,750,000 gallons
Total demand for both Buick and Dodge owners = 800,000 + 18,750,000 = 19,550,000 gallons
Therefore, the total amount of gasoline demanded in Gas Pump when the price of gasoline is $4 is 750 gallons (19,550,000 gallons / $26 per gallon). So, the best choice is D.
Learning Objectives
- Perceive the definition of demand functions and the way to approach their interpretation.
- Determine the overall market demand by adding together the demand functions of individuals within the population.
- Assess how the composition of the market influences the total demand for a merchandise.