In microeconomics, what does a market demand curve predict?

• A. The quantity of a good firms are willing and able to sell at each possible price, holding other factors constant
• B. The quantity of a good that a single consumer will buy at each possible price, holding other factors constant
• C. The price firms must charge to cover their average total cost at each output level
• D. The total quantity of a good that all consumers in the market are willing and able to buy at each possible price, holding other factors constant

Answer: (D)

Verified step by step guidance

1. Understand that a market demand curve represents the relationship between the price of a good and the total quantity demanded by all consumers in the market, holding other factors constant (ceteris paribus).
2. Recognize that it aggregates individual consumers' demand curves by summing the quantities demanded by each consumer at every possible price.
3. Note that the market demand curve slopes downward, reflecting the law of demand: as price decreases, the total quantity demanded increases, and vice versa.
4. Distinguish the market demand curve from a firm's supply curve, which shows the quantity firms are willing to sell at each price, and from an individual consumer's demand curve, which shows the quantity one consumer will buy.
5. Conclude that the market demand curve predicts the total quantity of a good that all consumers in the market are willing and able to buy at each possible price, holding other factors constant.