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Market Demand Curve
We can add or sum up the various quantities demanded by the number of consumers in the market and by doing so we can obtain the market demand curve for a commodity which like the individual consumer’s demand curve will slope downward to the right. How this summation is done is illustrated in fig. . Suppose there are three individual buyers of these goods in the market. In fig. diagrams (a), (b) and (c) show the demand curves of the three independent individual buyers. Now, the market demand curve can be obtained by adding together the amounts of the good which individual wish to buy at each price. Thus, at price P1 the individual a wishes to buy Oa, of these good; individual B wishes to buy Ob1 of the good and individual C wishes to buy Oc1 the total quantity of the good that all the three buy at a price P1 is therefore Oa1 + Ob1 + Oc1 which is equal to OQ, similarly, we can plot the quantity of these good that will be demanded by all the three individuals at every other price of good. When all the points showing the amounts demanded of various price are joined together we get a market demand curve for the good. For the sake of convenience we have supposed that there are three individuals or buyers in the market to get a demand curve for the good.
The market demand curve will slope downward to the right since the individual demand curves, whose lateral summation gives us the market demand curve, normally slope downward to the right. Besides, as price of the good falls, it is very likely that the new buyers will enter the market further raise the quantity demanded of the good. This will be the reason why the market demand curve should downward to the right.
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The market demand curve will slope downward to the right since the individual demand curves, whose lateral summation gives us the market demand curve, normally slope downward to the right. Besides, as price of the good falls, it is very likely that the new buyers will enter the market further raise the quantity demanded of the good. This will be the reason why the market demand curve should downward to the right.
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