Market Demand Curve - good when its price falls to $2 The...

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Market Demand Curve: The actual market as such has numerous consumers. An interesting question arises regarding the construction of such a market demand curve and its behavior. Figure 27 shows the method of construction of a demand curve for the entire market. We have two consumers A and B with two demand curves which have different slopes. Consumer A demands 2 units of a good when price is $4 but he demands 4 units of a good when the price is $2. Consumer B has no demand for the good at price of $4 but he demands 2 units of the
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Unformatted text preview: good when its price falls to $2. The market demand curve shows the total demand of the two consumers as 2 units at price $4 (2 + 0) and as 6 units (4 + 2 = 6) when price is $2. Such a geometric addition of demand curves is also known as lateral summation of demand . The market demand curve is flatter or more flexible than the individual demand curve. This is because of the fact that at every price the total demand in the market is much larger than that of any individual....
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