Describe how the market demand curve for private goods is developed. Describe how the societal demand curve for public goods is developed. Explain why each curve is developed the way it is
What will be an ideal response?
To develop the market demand curve for private goods, sum all the individual demand curves horizontally. To develop the societal demand curve add individual demand curves vertically. The quantity of private goods produced is based on total quantity demanded at various prices. As a result, each individual's demand at a given price is added to another individual's demand at that same price. For public goods, only one level of output can be produced. The task is to find out how much each member of society is willing to pay for that quantity. As a result, the individual demand curves must be added vertically.
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