Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

24 DEMAND, SUPPLY, AND EQUILIBRIUM: AN OVERVIEW [CHAP. 2
2.5 From the demand function Qd x ¼ 8/P x (P x is given in dollars), derive (a) the individual’s demand schedule
and (b) the individual’s demand curve, (c) What type of demand curve is this?
(a)
Table 2.9
P x ($) 1 2 4 8
Q x 8 4 2 1
(b)
Fig. 2-9
(c) The demand curve in this problem is a rectangular hyperbola. As we move further away from the origin along
either axis, the demand curve gets closer and closer to the axis but never quite touches it. This type of curve is
said to be asymptotic to the axes. Economists sometimes use this type of demand curve because of its special
characteristics. We will examine some of these special characteristics in the next chapter.
2.6 Table 2.10 gives two demand schedules of an individual for commodity X. The first of these (Qd x ) is the
same as the demand schedule in Problem 2.4. The second (Qdx 0 ) resulted from an increase in the
individual’s money income (while keeping everything else constant), (a) Plot the points of the two
demand schedules on the same set of axes and get the two demand curves, (b) What would happen
if the price of X fell from $5 to $3 before the individual’s income rose? (c) At the unchanged price
of $5 for commodity X, what happens when the individual’s income rises? (d) What happens if at
the same time that the individual’s money income rises, the price of X falls from $5 to $3? (e) What
type of good is commodity X? Why?
(a) Table 2.10
P x ($) 6 5 4 3 2 1
Qd x 18 20 24 30 40 60
0
Qd x 38 40 46 55 70 100
Fig. 2-10