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Questions
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.
Solution
The horizontal summation of individual demand curves yields the market demand curve.
In the diagram, DA and DB are two demand curves of A and B, respectively. Supposing that there are two individuals in the market, the market demand curve DM has been derived by taking their horizontal sum. Which means the sum of the quantity demanded, not the price.
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