We Are Given the Individual Demand Curves for All of the People

question 186

Multiple Choice

We are given the individual demand curves for all of the people that consume Good Y. Which statement is true about the market demand curve for Good Y?

• A) The market demand curve is obtained by horizontally summing the individual demand curves.
• B) The market demand curve is obtained by vertically summing the individual demand curves.
• C) The market demand curve cannot be obtained because information on prices is missing.
• D) The market demand curve cannot be obtained from individual demand curves.

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Definitions:

Product Variety

The assortment or range of different products or goods that are available in the market or produced by a company.

Free-Market System

A type of economic system where prices for goods and services are determined by the open market and by consumers. In a free-market system, the laws and forces of supply and demand are free from any intervention by a government or other authority.

Coordinating Mechanism

Systems and processes that facilitate the efficient allocation and use of resources within an economy or organization.

Command Economy

An economic system in which the government or a central authority controls all major aspects of production and distribution.