Imagine that there are 1,000 consumers who have preferences consistent with the same quasi-linear utility function (ui[x1; x2] = 10 ln[x1] + 10x2, which impliesMRS = ).
(a) Sketch the individual consumer's demand curve for good1.
(b) Find an expression for the market demand curve if these1,000 consumers are the only consumers who want good 1.
(c) Sketch the market demand curve. Is the market demand curvewell-behaved, i.e. smooth and downward sloping?
(d) If supply is given by XS = 500(p-1), what will the marketprice be? How much of good 1 will be sold?
(e) What happens in this market when every consumers' income doubles?