Asked by Abbie Mulbarger on May 04, 2024
Verified
For private goods, market demand is the ________ summation of individual demand curves and for public goods, market demand is the ________ summation of individual demand curves.
A) horizontal; vertical
B) vertical; horizontal
C) horizontal; horizontal
D) vertical; vertical
Market Demand
The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.
Individual Demand Curves
Graphical representations showing the relationship between the price of a good and the quantity demanded by an individual consumer, holding other factors constant.
Public Goods
Goods that are non-excludable and non-rivalrous, meaning they can be used by anyone and one person's use does not reduce its availability to others.
- Understand the methods for aggregating individual demands to determine market demand for public goods.
Verified Answer
DM
diandra manningMay 09, 2024
Final Answer :
A
Explanation :
For private goods, market demand is determined by horizontally summing individual demand curves because each unit of the good can be consumed by only one individual at a time. For public goods, market demand is determined by vertically summing individual demand curves because these goods can be consumed by multiple individuals simultaneously without reducing the amount available to others.
Learning Objectives
- Understand the methods for aggregating individual demands to determine market demand for public goods.