Our discussion of demand has so far referred to “the” demand curve. But whose demand is it? Mine? Yours?Everybody’s? The fundamental building block for demand is individual preferences. However, in this chapter we will always focus on the market demand, which represents the sum total of all individual demands. The market demand is what is observable in the real world.
The market demand curve is found by adding together the quantities’demanded by all individuals ‘attach price.
Does the market demand curve’ obey the law of downward .loping demand? It certainly does.If prices drop, for example, the lower prices attract new customers through the substitution effect. In addition,a price reduction will induce extra purchases of goods by existing consumers through both the income and the substitution effects. Conversely,a rise in the price of a good will cause some of.us to buy less.
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