Suppose Julia and Zach are the only consumers of milk.Julia's demand for milk is defined as Q^d_Julia = 12 - 3P at prices below $4 and zero for prices above $4.Zach's demand for milk is defined as Q^d_Zach = 10 - 2P at prices below $5 and zero for prices above $5.In this case,the market demand curve for milk is: A) is upward sloping. B) a downward sloping straight line. C) kinked at a price of $5. D) kinked at a price of $4.

Question

Quizplus · Accepted Answer

The market demand curve is the horizontal sum of Julia's and Zach's demand curves. Julia's demand drops to zero at a price above $4, and Zach's demand drops to zero at a price above $5. This means the combined market demand will change its slope at $4, where Julia stops buying milk, but Zach continues to buy until the price reaches $5. Thus, the market demand curve is kinked at the price of $4, reflecting the change in slope due to Julia's demand dropping to zero at that price.

Suppose Julia and Zach Are the Only Consumers of Milk