Question

For which one of the following goods would we need to sum individual demand curves vertically to obtain the total demand curve?

1) Goods with complementary demand
2) Goods with substitute demand
3) Goods with independent demand
4) Goods with elastic demand

Answer 1

To obtain the total demand curve for complementary goods, we sum individual demand curves vertically because the demand for these goods is interdependent.

Step-by-step explanation:

The question asks for which type of goods the total demand curve is obtained by summing individual demand curves vertically. Among the options provided, goods with complementary demand require that we sum individual demand curves vertically to obtain the total demand curve. This is because the demand for complementary goods is interdependent; the use of one good tends to enhance the consumption of the other.

For example, if we consider golf balls and golf clubs as complementary goods, a decrease in the demand for golf clubs due to a price increase would also decrease the demand for golf balls. Hence, to understand the total market demand for golf balls, we must consider the changes in demand for golf clubs as well, requiring a vertical summation of individual demand curves to reflect the total effect on both goods as a bundle.