The process of deriving the market demand curve is purely hypothetical because
A) one does not know the utility functions of all people in a society
B) all economic curves are purely theoretical and not practical
C) the psychological assumptions are irrational

Question

Quizplus · Accepted Answer

The market demand curve is derived by adding up the individual demand curves of all consumers in the market. However, since we cannot know the utility functions of all people in a society, the process of deriving the market demand curve is purely hypothetical. Despite this, it still provides a useful tool for analyzing the behavior of markets and consumers. Choices B and C are incorrect because economic curves are not purely theoretical and many of them can be observed in the real world. Additionally, while psychological assumptions may be subjective, they are still widely used in economic analysis.

The Process of Deriving the Market Demand Curve Is Purely