What is the relationship between individual demand and market demand?
What will be an ideal response?
The market demand equals the sum of the individual quantities demanded by all the demanders at each price. Therefore the market demand curve equals the horizontal sum of the individual demand curves.
You might also like to view...
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John should:
A. not expand, because there is a chance John will earn the same as if he didn't expand and would be out the $150,000 investment. B. expand, since he expects to earn $320,000 by expanding, and it will only cost him $150,000 to do so. C. not expand, since he expects to earn $120,000 more by expanding than not, and it will cost him $150,000 to do so. D. expand, since he has a 70 percent chance of earning more than the cost of expansion.
Explain how a rational consumer decides which goods to buy.
What will be an ideal response?