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Author Question: Explain how the market demand curve can be derived. Does the law of demand apply to the market ... (Read 101 times)

@Brianna17

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on: Jun 29, 2018
Explain how the market demand curve can be derived. Does the law of demand apply to the market demand curve?
 
  What will be an ideal response?

Question 2

What is perfect price discrimination? Is perfect price discrimination efficient? Why or why not?
 
  What will be an ideal response?


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GCabra

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The market demand curve for a good can be found by summing the quantities demanded by all of the households buying in the market for that good. Since all individuals' demand curves are downward sloping (due to the law of demand), the market demand curve will also be downward sloping. Therefore, the law of demand does apply to the market demand curve as well.

Answer to Question 2

Perfect price discrimination occurs if a firm is able to sell each unit of output for the highest price anyone is willing to pay for it. With perfect price discrimination, output increases to the point at which price, and hence marginal benefit, equals marginal cost. So perfect price discrimination achieves efficiency.


@Brianna17

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Reply 2 on: Jun 29, 2018
Gracias!

ryhom

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Reply 3 on: Yesterday
Excellent

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