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Chapter 3: Problem 5

Let's assume that each person in the United States consumes an average of 37 gallons of soft drinks (nondiet) at an average price of \(\$ 2\) per gallon and that the U.S. population is 294 million. At a price of \(\$ 1.50\) per gallon, each individual consumer would demand 50 gallons of soft drinks. From this information about the individual demand schedule, calculate the market demand schedule for soft drinks for the prices of \(\$ 1.50\) and \(\$ 2\) per gallon.

Short Answer

Expert verified
Answer: At the price of \(\$1.50\) per gallon, the quantity demanded is 14,700,000,000 gallons. At the price of \(\$2\) per gallon, the quantity demanded is 10,878,000,000 gallons.

Step by step solution

01

Calculate the total amount of soft drinks consumed by each person at the price of \(\$2\) per gallon

According to the problem, each person consumes an average of 37 gallons of soft drinks at a price of \(\$2\) per gallon.
02

Calculate the total consumption of soft drinks by the entire population at the price of \(\$2\) per gallon

Since there are 294 million people in the United States, the total consumption of soft drinks at a price of \(\$2\) per gallon can be calculated by multiplying the average consumption per person by the population. Total consumption at \(\$2\) = (Average consumption at \(\$2\) per person) × (Population) Total consumption at \(\$2\) = (37 gallons) × (294,000,000) Total consumption at \(\$2\) = 10,878,000,000 gallons
03

Calculate the total amount of soft drinks consumed by each person at the price of \(\$1.50\) per gallon

The problem states that each individual consumer would demand 50 gallons of soft drinks when the price is \(\$1.50\) per gallon.
04

Calculate the total consumption of soft drinks by the entire population at the price of \(\$1.50\) per gallon

Similarly, we'll multiply the average consumption per person at the \(\$1.50\) price point by the population. Total consumption at \(\$1.50\) = (Average consumption at \(\$1.50\) per person) × (Population) Total consumption at \(\$1.50\) = (50 gallons) × (294,000,000) Total consumption at \(\$1.50\) = 14,700,000,000 gallons
05

Create the market demand schedule

Now we can create the market demand schedule by listing the quantities demanded at each price. Market Demand Schedule: | Price per Gallon | Quantity Demanded (Gallons) | |------------------|-------------------------------| | \(\$2\) | 10,878,000,000 | | \(\$1.50\) | 14,700,000,000 |

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Most popular questions from this chapter

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