Topic: Market Demand Diculty: 3% Correct Responses: 0 Discrimination Index: 015.3 In Tassel,…

Topic: Market Demand Diculty: 3% Correct Responses: 0 Discrimination Index: 015.3 In Tassel, Illinois (pop; 20; 000); there are two kinds of families, those who like swimmingpools and those who don’t. Half of the population is of each type. Families who like swimmingpools are willing to spend up to 5% of their income each year on a swimming pool. Families whodon’t like them would pay nothing for a swimming pool. Nobody wants more than one swimmingpool and nobody has thought of sharing a swimming pool. Incomes in Tassel range between $10,000and $110,000. For incomes, M; in this range, the number of families in Tassel with income greaterthan M is about 22; 000??:2M. (The two types of families have the same income distribution.) Findthe aggregate demand function for swimming pools in Tassel (demand for swimming pools as afunction of annual cost of having one).Answer: The number of people willing to pay at least p is half of the number who have income atleast 20p. Therefore the aggregate demand function is 11; 000?? 2p.