Question

3. Individual and market demand Suppose that Sam and Teresa are the only consumers of scented candles in a particular market. The following table shows their annual demand schedules: Price Sam's Quantity Demanded Teresa's Quantity Demanded (Dollars per candle) (Candles) (Candles) 16 32 10 4 24 6 6 16 8 8 10 0 4 On the following graph, plot Sam's demand for scented candles using the green points (triangle symbol). Next, plot Teresa's demand for scented candles using the purple points (diamond symbol). Finally, plot the market demand for scented candles using the blue points (circle symbol) Note: Line segments will automatically connect the points. Remember to plot from left to right.

Answer 1

The total demand is the sum of demand by person and person T at each price. Given the demand for person S and person T, construct the total demand as follows: Teresa's quantity demanded Sam's Price (s quantity per candle) Demanded (Candles) 2 16 4 10 Total Demand 32 24 48 34 22 10 4 8 10 2 0 8 4 At the price 2, the total demand is 48 (=16+ 32). At the price 4, the total demand is 34 (=10+ 24). The total demand curve is the horizontal summation of individual demand curves. Graph the figure. The required figure is as follow: Sam's Demand Teresa's Demand PRICE (Dollars per cande) Market Demand QUANTITY (Candies) Green colored line is Person S's demand curve, purple colored line is Person T's demand curve and the blue colored demand curve is the total demand curve.