Question

Which of the following statements is correct?

	a.	Each individual may choose to consume a different quantity of a (pure) private good, that is why the market demand for private goods are derived by summing individual demands vertically—at every quantity, adding individual valuations of that additional unit.
	b.	Each individual level of consumption of a (pure) public good is the same, that is why the market demand for public goods are derived by summing individual demands vertically—at every quantity, adding individual valuations of that additional unit.
	c.	Each individual may choose to consume a different quantity of a (pure) public good, that is why the market demand for private goods are derived by summing individual demands horizontally—at every price, adding individual quantities demanded.
	d.	Each individual level of consumption of a (pure) private good is the same, that is why the market demand for public goods are derived by summing individual demands vertically—at every quantity, adding individual valuations of that additional unit.

Answer 1

The market demand for private good is obtained by summing the individual demand curves horizontally while the market demand for the pure public good is obtained by summing individual demand curves vertically.

Hence the correct statement is (b) : Each individual level of consumption of a (pure) public good is the same, that is why the market demand for public goods are derived by summing individual demands vertically—at every quantity, adding individual valuations of that additional unit.