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QUESTION:

. Individual and market demand

Suppose that Musashi and Rina represent the only two consumers of laundry detergent in some hypothetical market. The following table presents their annual demand schedules for laundry detergent:
PriceMusashi’s Quantity DemandedRina’s Quantity Demanded
(Dollars per bottle)(Bottles)(Bottles)
21232
4624
6416
8212
1008
On the following graph, plot Musashi’s demand for laundry detergent using the green points (triangle symbol). Next, plot Rina’s demand for laundry detergent using the purple points (diamond symbol). Finally, plot the market demand for laundry detergent using the blue points (circle symbol).
Note: Line segments will automatically connect the points. Remember to plot from left to right.

ANSWER:

Note: Line segments will automatically connect the points. Remember to plot from left to right.
Points:
1 / 1
Close Explanation
Explanation:
Each point on an individual’s demand curve corresponds to one of the entries in the individual’s demand schedule. For example, when the price of detergent is $2, Musashi demands 12 bottles per year and Rina demands 32 bottles per year. Therefore, the point (12, 2) lies on Musashi’s demand curve, and the point (32, 2) lies on Rina’s demand curve.
You can find the points of the market demand curve by adding up the quantity demanded by each individual in the market. For example, when the price of detergent is $2, Musashi demands 12 bottles and Rina demands 32 bottles; therefore, total market demand is 12+32=44 bottles per year. Repeating this process, you can construct the following market demand schedule:
PriceMusashi’s Qty Demanded+Rina’s Qty Demanded=Market Qty Demanded
($ per bottle)(Bottles)(Bottles)(Bottles)
2123244
462430
641620
821214
10088
Visually, this corresponds to a horizontal summation of the demand curves. In other words, although each point on an individual’s demand curve refers to a price and a quantity, it’s best to think of that point as the quantity the individual would buy at that price, rather than as the price the individual would be willing to pay for that quantity. Therefore, to find the total quantity demanded in a market at a given price, add up the quantity demanded by each individual at that price—that is, you add the horizontal component of each point on each individual’s demand curve.

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