In microeconomics, what does a market demand curve show?

• A. The relationship between the price of a good and the quantity supplied by firms, holding other factors constant
• B. The relationship between the price of a good and the total quantity demanded by all consumers in the market, holding other factors constant
• C. The minimum price consumers are willing to accept to buy an additional unit of the good
• D. The relationship between consumer income and the quantity demanded of a good, holding the price constant

Answer: (B)

Verified step by step guidance

1. Understand that a market demand curve represents the total quantity of a good that all consumers in a market are willing and able to purchase at different prices, holding other factors constant.
2. Recognize that the curve plots the relationship between the price of the good (on the vertical axis) and the total quantity demanded (on the horizontal axis).
3. Note that the market demand curve is derived by horizontally summing the individual demand curves of all consumers in the market.
4. Remember that the curve typically slopes downward, indicating that as the price decreases, the quantity demanded increases, ceteris paribus (all else equal).
5. Distinguish the market demand curve from other concepts such as supply curves (which relate price to quantity supplied) and demand functions that relate quantity demanded to income or other factors.