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Rex and Chaz are roommates who both enjoy renting kayaks to go ocean kayaking in Monterey Bay, California. Rex's inverse demand curve for kayaking is: P = 48 - qr and Chaz's inverse demand curve for kayaking is P = 48 - 8qc, where qr is the number of trips Rex takes and qc is the number of trips Chaz takes.
(b) Convert Rex and Chaz's inverse demand curves into "standard demand" curves that state the quantity of trips demanded by each person at any given price.
(c) If we define Rex and Chaz's house as the total market for kayaking trips, what is the market demand for kayaking trips? Plot Rex's demand, Chaz's demand, and the market demand curve. (Hint: it may be easier to use inverse demand when you are ready to plot the curves).
(d) Suppose that the price of a kayak trip is initially p0 = $16. Due to increased maintenance costs, the price is raised to p1 = $24. How many trips do Rex and Chaz each demand both before and after the price change?
(e) What is the change in consumer surplus as a result of the price change for both Rex and Chaz?
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