4

THE MARKET FORCES OF SUPPLY

AND DEMAND

© 2008 Cengage Learning

Market Demand versus Individual Demand

• Market demand refers to the sum of all

individual demands for a particular good or
service.
• Graphically, individual demand curves are
summed horizontally to obtain the market
demand curve.

© 2008 Cengage Learning

 The market demand curve is the horizontal sum
of the individual demand curves!
When the price is $2.00, When the price is $2.00, The market demand at
Catherine will demand 4 Peter will demand 3 ice- $2.00 will be 7 ice-cream
ice-cream cones. cream cones. cones.

Catherine’s Demand + Peter’s Demand = Market Demand

Price of Ice- Price of Ice- Price of Ice-
Cream Cone Cream Cone Cream Cone

2.00 2.00 2.00

1.00 1.00 1.00

3 5 7 13
4 8
Quantity of Ice-Cream Cones Quantity of Ice-Cream Cones Quantity of Ice-Cream Cones

When the price is $1.00, When the price is $1.00, The market demand at
Catherine will demand 8 Peter will demand 5 ice- $1.00, will be 13 ice-
ice-cream cones. cream cones. cream cones.

© 2008 Cengage Learning