Mkt demand curve is flatter than individual demand curve Because when price change , change in market demand is more than change in individual demand

Market Demand Curve: Horizontal Summation of Individual Demand Curves

The market demand curve represents the total quantity of a product or service that all consumers in a market are willing and able to purchase at different price levels. It is derived by horizontally summing up the individual demand curves of all consumers in the market. This concept is based on the assumption that the quantity demanded by each consumer remains constant as the price changes.

1. Individual Demand Curves:
An individual demand curve represents the quantity of a product or service that an individual consumer is willing and able to purchase at different price levels, holding all other factors constant. It illustrates the relationship between price and quantity demanded for a single consumer.

2. Horizontal Summation:
To derive the market demand curve, we horizontally sum the individual demand curves of all consumers in the market. This means that at each price level, we add up the quantities demanded by each consumer to determine the total market quantity demanded.

3. Example:
Let's consider a simple example to understand how individual demand curves are horizontally summed to obtain the market demand curve. Suppose there are two consumers, A and B, in a market for apples. Their individual demand curves are as follows:

Consumer A:
- Price $2: Quantity Demanded 10
- Price $4: Quantity Demanded 8
- Price $6: Quantity Demanded 6

Consumer B:
- Price $2: Quantity Demanded 5
- Price $4: Quantity Demanded 4
- Price $6: Quantity Demanded 3

4. Horizontal Summation Process:
To obtain the market demand curve, we horizontally sum the quantities demanded by each consumer at each price level. For example, at a price of $2, consumer A demands 10 apples and consumer B demands 5 apples. Therefore, the total market quantity demanded at this price is 10 + 5 = 15 apples.

5. Plotting the Market Demand Curve:
Once we have horizontally summed the quantities demanded at different price levels, we can plot the market demand curve on a graph. The price is represented on the vertical axis, and the quantity demanded is represented on the horizontal axis. By connecting the points representing the total quantities demanded at each price level, we obtain the market demand curve.

6. Characteristics of the Market Demand Curve:
The market demand curve is typically downward sloping, indicating an inverse relationship between price and quantity demanded. This is because as the price decreases, more consumers are willing and able to purchase the product, leading to an increase in the total market quantity demanded. Conversely, as the price increases, the quantity demanded decreases.

In conclusion, the market demand curve is derived by horizontally summing the individual demand curves of all consumers in a market. This process allows us to determine the total quantity of a product or service that all consumers are willing and able to purchase at different price levels. By plotting the market demand curve, we can visualize the relationship between price and quantity demanded in the market.