In microeconomics, what does the market demand curve show?

• A. The relationship between the price of a good and the total quantity demanded by all consumers in the market, holding other factors constant
• B. The relationship between consumer income and the quantity demanded of a good, holding the price of the good constant
• C. The relationship between the price of a good and the quantity supplied by firms, holding other factors constant
• D. The relationship between the price of a good and the quantity demanded by a single consumer, holding other factors constant

Answer: (A)

Verified step by step guidance

1. Understand that the market demand curve aggregates the behavior of all consumers in the market, not just a single consumer.
2. Recognize that the market demand curve shows how the total quantity demanded changes as the price of the good changes, assuming other factors remain constant (ceteris paribus).
3. Recall that the demand curve focuses on the relationship between price and quantity demanded, not on consumer income or quantity supplied by firms.
4. Identify that the correct interpretation involves the total quantity demanded by all consumers at different prices, which is the sum of individual demands.
5. Conclude that the market demand curve illustrates the relationship between the price of a good and the total quantity demanded by all consumers in the market, holding other factors constant.