1 Suppose Fred and Wilma have the following inverse demand c

1. Suppose Fred and Wilma have the following (inverse) demand curves for fruity pebbles:
P = 150 – 3Q_F and P = 150 – 1.5Q_W.
If they are the only two people in the fruity pebbles market, then the market demand is:
A. P = 150 – Q
B. P = 300 – 4.5 Q
C. Q = 66.67 – 2/9 P
D. Q = 60 – P
E. P = 100 – 6Q

Solution

P = 150 - 3QF

QF = (150 - P) / 3 = 50 - 0.33P

Again, P = 150 - 1.5QW

QW = (150 - P) / 1.5 = 100 - 0.67P

Market demand is horizontal summation of individual demand curves, so

Q = QF + QW

Q = 50 - 0.33P + 100 - 0.67P

Q = 150 - P

So,

P = 150 - Q

Correct option (A)