Aggregate Demand and Horizontal Additio1

Aggregate Demand and Horizontal Additio1 - Aggregate Demand...

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Aggregate Demand and Horizontal Addition Typically, economists don't look at individual demand curves, which can vary from person to person. Instead, they look at aggregate demand, the combined quantities demanded of all potential buyers. To do this, add the quantities which buyers are willing to buy at different prices. For instance, if Jim and Marvin are the only two buyers in the market for graham crackers, we would add how many they are willing to buy at price p =1 and record that as aggregate demand for p =1. Then we would add how many they are willing to buy at price p =2 and record that as aggregate demand for p =2, and so on. This results in the following graph of aggregate demand for graham crackers: Jim and Marvin's Demand Curves for Graham Crackers Aggregate Demand Curve for Graham Crackers This method is called horizontal addition because you look at a price level, and add the separate quantities demanded across that price level, giving you total quantity demanded for that price.
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.

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Aggregate Demand and Horizontal Additio1 - Aggregate Demand...

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