Table 3-1

-Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee falls from $6 to $4,the market quantity demanded would
A)decrease by 89 lbs.
B)increase by 26 lbs.
C)increase by 61 lbs.
D)increase by 110 lbs.

Question

Table 3-1
 
-Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee falls from $6 to $4,the market quantity demanded would
A)decrease by 89 lbs. 
B)increase by 26 lbs. 
C)increase by 61 lbs. 
D)increase by 110 lbs.

Quizplus · Accepted Answer

To find the change in the market quantity demanded, we need to add up the individual quantities for each price at $6 and at $4.

At $6, the total quantity demanded in the market is: 
Luke = 83 lbs
Ravi = 85 lbs
Rest of market = 120 lbs
Total = 288 lbs

At $4, the total quantity demanded in the market is: 
Luke = 95 lbs
Ravi = 93 lbs
Rest of market = 155 lbs
Total = 343 lbs

The change in quantity demanded is thus: 
343 - 288 = 55 lbs

Therefore, the market quantity demanded would increase by 55 lbs if the price of Kona coffee falls from $6 to $4. The only option that is closest to this answer is C, which states that the market quantity demanded would increase by 61 lbs.

Table 3-1 -Refer to Table 3-1.The Table Above Shows the Demand Schedules