Question

3-2 Demand 2. What is the difference between an individual demand curve and a market demand curve?

3. If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash?

4. If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if incomes increase?

5. What would be the effects of each of the following on the demand for hamburger in Hilo, Hawaii? In each case, identify the responsible determinant of demand. a) The price of chicken falls. b) The price of hamburger buns doubles. c) Scientists find that eating hamburger prolongs life. d) The population of Hilo doubles.

Answer 1

• The market demand curve is the summation of individual demand curves. Individual demand curve depicts the ability to buy and willingness of one individual at a particular point of time. Market demand curve on the other hands represents the demand of all individuals/ buyer in one market at a particular point of time.
• f the price of zucchini increases, causing the demand for yellow squash to rise, the two goods will be called as substitutes. If the price of a substitute increases the demand for the concerned good increases. The relationship is direct and value of elasticity between them is positive.
• If plane travel is a normal good and bus travel is an inferior good, The demand curve for plane will shift to the right if it is considered as a normal good whereas the demand curve for bus will shift to the left if it is considered an inferior good after an increase in the income of the buyer.