Market Demand Curve

# Market Demand Curve Assignment Help

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# Market Demand Curve

The market demand curve is a sum of the individual demand curve of the individuals who are the actual or the potential buyers of a commodity. To obtain the market demand curve, we have to horizontally add up all the individual demand curves at various price levels. Suppose,

 Price (\$) A (Units) B (Units) C (Units) Total Market Demand (Unit) 5 4 3 2 1 20 30 40 50 60 10 20 30 40 50 0 10 20 30 40 30 60 90 120 150

The market demand curve is a sum of the individual demand curve of the individuals who are the actual or the potential buyers of a commodity. To obtain the market demand curve, we have to horizontally add up all the individual demand curves at various price levels. Suppose,

 Price (\$) A (Units) B (Units) C (Units) Total Market Demand (Unit) 5 4 3 2 1 20 30 40 50 60 10 20 30 40 50 0 10 20 30 40 30 60 90 120 150

In the last column, we have the total demand at various prices. When the price is high (at \$ 5), only A and B purchase, C does not purchase anything. When the price goes low A and B purchase, C also enters into the market and makes his purchases. Thus the total market demand goes up.

Now if we draw a diagram on the basis of the above figures, we have three individual demand curves Da, Db and Dc for the three individual buyers A, B and C. then, we sums up the demand of these three individuals at each price level. Price of \$ 5, A purchases 20 units, B purchase 10 units while C does not purchase anything. Thus, the total demand in the market at \$ 5 is 30 units. Similarly, at \$ 4, A purchases 30 units, B purchases 20 units and C purchase 10 units, the total demand being 60 units. Similarly, we add up the demand at all the other price levels.

Now, we take each price level and mark the corresponding demand against it. Then by joining these points we draw the mark the corresponding demand against it. Then by joining these points we draw the market demand curve Dm.

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