Question

How is the market demand curve derived from the individual demand curves?

With the help of a diagram, show how a market demand curve can be obtained from individual demand curves.

Answer 1

The horizontal summation of individual demand curves yields the market demand curve.

In the diagram, D_A and D_B are two demand curves of A and B, respectively. Supposing that there are two individuals in the market, the market demand curve D_M has been derived by taking their horizontal sum. Which means the sum of the quantity demanded, not the price.