How does the construction of a market demand curve for a private good differ from that for a public good?
A) The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.
B) The market demand curve for a private good is determined by adding up the price each consumer is willing to pay for each quantity of the good but the market demand curve for a public good is determined by adding up but the quantities demanded by each consumer at each price.
C) There is no difference; in both cases the demand curve is determined by adding up the quantities demanded by each consumer at each price.
D) There is no difference; in both cases the demand curve is determined by adding up the price each consumer is willing to pay for each quantity of the good.

Question

Quizplus · Accepted Answer

The market demand curve for a private good is constructed by horizontally summing individual demand curves, which means adding the quantities demanded by each consumer at each price. For a public good, the market demand curve is constructed by vertically summing individual demand curves, which involves adding up the maximum price each consumer is willing to pay for each quantity of the good, reflecting the collective value placed on each unit of the good.

How Does the Construction of a Market Demand Curve for a Private