The market for radios consists of 100 consumers, each ofwhom has the demand function:

QDradio = 4 − 0.4 Pradio+ 0.0025 Income + 0.25 Pnewspaper − 0.005 Pbatteries

At current average prices, a radio costs Â￡10, a newspapercosts Â￡1, and batteries cost Â￡2. Average income is Â￡1,000. The market demandcurve for radios is most accurately described as:

A)         400 − 40 Pradio + 0.25 Income +    25 Pnewspaper − 0.5 Pbatteries.

B)         16.85 − 0.025 QDradio.

C)         674 − 40 Pradio.

答案 B

Aggregating the individual demand functions into the marketdemand function we get:
QDradio = 100(4 − 0.4 Pradio + 0.0025 Income +0.25 Pnewspaper − 0.005 Pbatteries)
QDradio = 400 − 40 Pradio + 0.25 Income + 25Pnewspaper − 0.5 Pbatteries
Substituting average values for all variables except pricewe get:
QDradio = 400 − 40 Pradio + 0.25(1,000) +25(1) − 0.5(2)
QDradio = 400 − 40 Pradio + 250 + 25 − 1
QDradio = 674 − 40 Pradio
40 Pradio = 674 − QDradio
Solving for price gives us the demand curve:
Pradio = 16.85 − 0.025 QDradio