<p>In a perfectly competitive market, firms produce where marginal cost (MC) equals marginal revenue (MR).  So, if the P=0 the firm's MC would have to equal zero.  That, in turn, means the firm is getting the next marginal input(s) for free as well.  So, while this is an interesting theoretical concept I don't think we'd see this behavior in the real world.</p>
<p>I suppose the demand curve could be perfectly inelastic ON the y-axis meaning quantity demanded would be zero at all prices.  Alternatively, the demand curve could be perfectly elastic ON the x-axis meaning quantity demanded could stretch to infinity at a price of zero.</p>
<p>The first situation is nobody would buy the product and the second situation is nobody would produce it.</p>

CC BY-SA 4.0
2024-05-10T11:50:02.530Z
2024-05-10T11:50:02.530Z
David Pineault
<p>Given a demand curve for a particular commodity, which I'll interpret as a function <span class="math-container">$p(q)$</span>, the <span class="math-container">$p$</span>-intercept can be interpreted as the choke price, i.e. the lowest price at which quantity demanded is 0.</p>
<p>Assuming the demand curve eventually intercepts the <span class="math-container">$q$</span>-axis, the <span class="math-container">$q$</span>-intercept can be interpreted, by definition, as the quantity demanded by consumers if the commodity were free. In other words, any production level greater than this quantity will necessarily result in excess due to the fact that consumers won't want more of the commodity even at a price of 0. Is there some term for this theoretical quantity? Something analogous (but opposed) to the notion of the choke price?</p>
<p>I'm a mathematician, and not an economist, so my economics vocabulary is fairly limited. I was reading about the notion of &quot;market saturation&quot; which seems related but not quite what I'm looking for. Thanks in advance!</p>

<supply-and-demand><demand>
Interpreting the q-intercept of the demand curve
Jared
# Interpreting the q-intercept of the demand curve

(Asked by: username_0 on 2020-09-04)

Given a demand curve for a particular commodity, which I'll interpret as a function $p(q)$, the $p$-intercept can be interpreted as the choke price, i.e. the lowest price at which quantity demanded is 0.

Assuming the demand curve eventually intercepts the $q$-axis, the $q$-intercept can be interpreted, by definition, as the quantity demanded by consumers if the commodity were free. In other words, any production level greater than this quantity will necessarily result in excess due to the fact that consumers won't want more of the commodity even at a price of 0. Is there some term for this theoretical quantity? Something analogous (but opposed) to the notion of the choke price?

I'm a mathematician, and not an economist, so my economics vocabulary is fairly limited. I was reading about the notion of "market saturation" which seems related but not quite what I'm looking for. Thanks in advance!

**Tags:** supply-and-demand, demand

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## 1 answers

### Answer by username_1 on 2024-05-10. Score: -2

In a perfectly competitive market, firms produce where marginal cost (MC) equals marginal revenue (MR). So, if the P=0 the firm's MC would have to equal zero. That, in turn, means the firm is getting the next marginal input(s) for free as well. So, while this is an interesting theoretical concept I don't think we'd see this behavior in the real world.

I suppose the demand curve could be perfectly inelastic ON the y-axis meaning quantity demanded would be zero at all prices. Alternatively, the demand curve could be perfectly elastic ON the x-axis meaning quantity demanded could stretch to infinity at a price of zero.

The first situation is nobody would buy the product and the second situation is nobody would produce it.


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