In a market there are two consumers. Each consumer has a demand curve of P = 10–0.5q. What is the market demand curve? Group of answer choicesP = 10 – QP = 10 – 0.25QP = 20 – QP = 10 – 2QP = 20 – 0.5Q
Question
In a market there are two consumers. Each consumer has a demand curve of P = 10–0.5q. What is the market demand curve? Group of answer choicesP = 10 – QP = 10 – 0.25QP = 20 – QP = 10 – 2QP = 20 – 0.5Q
Solution
The market demand curve is derived by horizontally summing the individual demand curves of all consumers in the market.
Each consumer's demand curve is P = 10 - 0.5q. This means that each consumer's quantity demanded (q) decreases by 2 units for each $1 increase in price (P).
If there are two consumers in the market, the total quantity demanded at each price level is the sum of the quantities demanded by each consumer.
So, the market demand curve is P = 10 - 0.5Q, where Q is the total quantity demanded in the market. However, since there are two consumers, we need to double the quantity demanded.
Therefore, the market demand curve is P = 20 - Q.
So, the correct answer is "P = 20 – Q".
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