Market Demand versus Individual Demand

individual’s demand for a product. To analyze how markets work we need to determine the market demand the sum of all the individual demands for a particular or service.

the demand schedules for ice cream of two individuals Catherine and Nicholas. At any price, Catherine’s demand schedule tells us how much ice cream she buyers, and Nicholas demand schedule tells us how much ice cream the buys. The market demand at each price is the sum of the two individual demands.

the demand curves that correspond to these demand schedules. Notice that we sum the individual demand curves horizontally to obtain the market demand curve. That is to find the total quantity demanded at any price we add the individual quantities found on the horizontal axis of the individual demand curves. Because we are interested in analyzing how markets work we will work most often with the market demand curve. The market demand curve shows how the total quantity demanded of a good varies as the price of the good varies while all the other factors that affect how much consumers want are held constant.

The quantity demanded in a market is the sum of the quantities demanded by all the buyers at each price. Thus the market demand curve is found by adding horizontally the individual demand curves. At a price of $2.00 Catherine demands 4 ice cream cones and Nicholas demands cones. The quantity demanded in the market at this price is 7 cones.

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