In a typical market, what does the market demand curve show?

• A. The relationship between consumers’ income and the quantity demanded of a good, holding the good’s price constant
• B. The relationship between the price of a good and the total quantity supplied by all firms in the market, holding other factors constant
• C. The relationship between the price of a good and the total quantity demanded by all consumers in the market, holding other factors constant
• D. The minimum price at which producers are willing to sell each quantity of the good

Answer: (C)

Verified step by step guidance

1. Understand that the market demand curve represents the total quantity of a good that all consumers in the market are willing and able to purchase at different prices.
2. Recognize that the curve shows the relationship between the price of the good and the total quantity demanded, assuming other factors (like consumer income, tastes, and prices of related goods) remain constant (ceteris paribus).
3. Note that the market demand curve is derived by horizontally summing the individual demand curves of all consumers in the market at each price level.
4. Distinguish the market demand curve from the supply curve, which relates price to quantity supplied by producers, and from relationships involving income or minimum prices.
5. Conclude that the market demand curve specifically illustrates how quantity demanded changes as the price changes, holding other influences constant.