Reference no: EM132428665

Question 1: Explain, with help of illustration, how changes in price of a product which affect the budget line and consumer equilibrium could be used to derive individual demand curve.

Question 2: Three people have the following individual demand schedule for Count Chocula cereal that show how many boxes each would purchase monthly at different price:

Price Person 1 Person 2 Person 3

  $5.00      0      1      2

$4.50      0          2      3

$4.00      0      3        4

$3.50      1      3      5

Question 3: What is the market demand schedule for this cereal? (Assume that these three people are the only buyers).

Question 4: Why might the three people have different demand schedules?  

Question 5: List 3 features of perfectly competitive market. How does homogeneous product produced by perfectly competitive firms lead to fixed price of the product?