Suppose Julia and Zach are the only consumers of milk.Julia's demand for milk is defined as at prices below $4 and zero for prices above $4.Zach's demand for milk is defined as at prices below $5 and zero for prices above $5.
A) The market demand curve is upward sloping
B) The market demand curve is a downward sloping straight line
C) The market demand curve is kinked at a quantity of 2 units
D) The market demand curve is kinked at a quantity of 1 unit

Question

Suppose Julia and Zach are the only consumers of milk.Julia's demand for milk is defined as  at prices below $4 and zero for prices above $4.Zach's demand for milk is defined as  at prices below $5 and zero for prices above $5.
A) The market demand curve is upward sloping 
B) The market demand curve is a downward sloping straight line 
C) The market demand curve is kinked at a quantity of 2 units 
D) The market demand curve is kinked at a quantity of 1 unit

Quizplus · Accepted Answer

The market demand curve is derived by horizontally summing the individual demand curves of Julia and Zach. At a price of $4, Julia demands 8 units of milk and Zach demands 2 units of milk. At $5, Zach's demand becomes zero, while Julia's demand remains at 8 units. This forms a "kink" in the market demand curve at a quantity of 2 units. Therefore, the correct answer is C.

Suppose Julia and Zach Are the Only Consumers of Milk