Consider a market where there are just two consumers and suppose their demands for the good are given as follows: Calculate the market demand for the good.
The market demand for the good at each price level is as follows:
| p | Market Demand (D = d₁ + d₂) |
|---|---|
| 1 | 33 |
| 2 | 28 |
| 3 | 25 |
| 4 | 22 |
| 5 | 19 |
| 6 | 16 |
Explanation
According to the NCERT textbook, the market demand for a good at a particular price is the total demand of all consumers taken together. When there are two consumers in the market, the market demand at any given price is derived by adding up the demands of the two consumers at that price. This is known as horizontal summation of individual demand curves.
Solution Steps
Step 1: Understanding Market Demand The market demand for a good at a particular price is the total demand of all consumers taken together. For two consumers, market demand = d₁ + d₂ at each price.
Step 2: Calculate Market Demand at Each Price At p = 1: Market Demand = 9 + 24 = 33 At p = 2: Market Demand = 8 + 20 = 28 At p = 3: Market Demand = 7 + 18 = 25 At p = 4: Market Demand = 6 + 16 = 22 At p = 5: Market Demand = 5 + 14 = 19 At p = 6: Market Demand = 4 + 12 = 16
Step 3: Present the Market Demand Schedule The market demand schedule showing the relationship between price and total quantity demanded is presented in the answer above.