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?
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.
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An upward sloping indifference curve defined over two goods violates which of the following assumptions from the theory of consumer behavior?
A) transitivity. B) preferences are complete. C) more is preferred to less. D) all of the above E) none of the above
"Public goods" are provided by the public sector as a matter of social choice, not economic necessity
Indicate whether the statement is true or false