market - Market Demand 99 Market Demand A To get market...

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Unformatted text preview: Market Demand 99 Market Demand A. To get market demand, just add up individual demands. 1. add horizontally 2. properly account for zero demands; Figure 15.2. Market demand = sum of the two demand curves Agent 1's demand Agent 2's demand D ( p ) 1 1 D ( p ) 2 2 PRICE PRICE PRICE 20 15 10 5 20 15 10 5 x x 2 1 x 1 2 x + C B A D ( p ) 1 1 D ( p ) 2 2 + 20 15 10 5 20 15 10 5 Figure 15.2 Market Demand 100 B. Often think of market behaving like a single individual. 1. representative consumer model 2. not true in general, but reasonable assumption for this course C. Inverse of aggregate demand curve measures the for each individual. D. Reservation price model 1. appropriate when one good comes in large discrete units 2. reservation price is price that just makes a person indifferent 3. defined by Market Demand 101 ..... ..... ..... ..... p * B A A B B A p * p * p * x x x + x A B C Agent A's demand Agent B's demand Demand market A B Figure 15.3 4. see Figure 15.3....
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market - Market Demand 99 Market Demand A To get market...

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