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Demand curve to estimate the consumer surplus:
Adam's demand curve for commodity X is: XA = 10 - 2Px . Betty's demand curve for commodity X is: XB = 10 - 3Px .
(a) What is the market demand curve for commodity X.
(b) Draw the three demand curves on one graph and compare their slopes.
(c) Assume that the market price of commodity X is $2 per unit. Calculate the point price elasticity of demand for two individual demand curves and for the market demand curve.
(d) If the price is increased slightly from $2, what will happen to the total expenditure on commodity X by Adam and Betty?
(e) Use the market demand curve to estimate the consumer surplus at price equal to $2.
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