Individual Demand and Market Demand - Video Tutorials & Practice Problems
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Individual Demand and Market Demand
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Alright, so now let's see how your individual demand curve will relate to the market demand curve. So every person has their own individual demand curve, right? This is how much they would want at a certain price? If we're talking about cereal and the price is $5. How much boxes, how many boxes of cereals would you buy at $5 or at $4? This is your personal demand curve, but to find the market demand curve, what we do is we're gonna some all the individual demand curves, right? So we're gonna get the sum of all the individual demand curves to find the market demand. So if at $10 I want this many, you want that many, Someone else wants that many. The market demand is going to be the sum of all our individual demands. Let's look at this example here. So I've got the market for Supreme pizzas here. And to keep it simple, we're going to say that there's only these two guys in the market, We've got Fat Albert and skinny Hendricks here and we want to find out what the market demand is at all these different prices. So we've got their individual demands here and to find the market demand. We're just going to add them up. Pretty simple. So at a price of $2 Fat Albert's gonna want 16 pizzas, uh skinny Hendricks wants four pizzas, we're gonna add those up. We're gonna get a market demand of 20 pizzas at a price of $2. Cool, so let's just go ahead and do all of these here. So at a price of $4 what do we get? We get 12 plus three. Uh market demand of 15 at a price of six. We'll get a market demand of 10. Right? And this is consistent with our law of demand as well, right? We're seeing that as the price rises, The quantity demanded here is falling both for the individuals and for the market. Cool. So we're consistent here. Let's go ahead and put these numbers on the graph. So first we've got graphs for Fat Albert and skinny Hendricks here. Right? So notice everyone has their own individual demand curve. I'm gonna scroll down a little more. So we got Fat Albert in that first column. Cool. Alright, so the first thing we wanna do is label our axis here. So let's start with Fat Albert here. And remember we gotta label one price and one quantity. And my trick you remember is we're gonna put them in abc order left to right price quantity there. Cool. Alright, let's go ahead and graph Fat Albert's demand here. So at a price of two, he's gonna want 16, price of four. Let's just get all of these on here. He wants 12. 6. He wants eight. Um And if you guys are struggling here with the graph, make sure you watch the graphing review from segment one, and you will probably do a lot better here on the graphs. Cool. So that is gonna be Fat Albert's demand. This is just Fat Albert's individual demand curve here. Right? Fat Albert, I guess I have that written at the top, but I just want to reiterate that Fat Albert's demand is this curve right here? Cool. And let's say the price was $6. Well, Fat Albert's quantity demanded would be eight. Cool, understand. Let's do the same thing for skinny Hendricks here. So, he's gonna have a different demand curve. Um Let's start again with the price of $2. He's gonna want four. Right? So, we're back up here on in our table. We've got a price of $2 skinny Hendrix's demand is four. Cool. So, I'm gonna scroll down. So we have the whole graph and I'm gonna get out of the way while we make this one. All right, let's do this same thing. I want to label the axes again. We've got price. We've got quantity. Alright, let's go ahead and get their points. The skinny Hendrix's points on the graph. So we've got a price of two. He's gonna want four at a price of four. He wants three and that's gonna be right here in the middle of two and four. There we go. At a price of six. He's gonna want to let's get all these in here. 81 and 10 0. Cool. So let's go ahead and make his demand curve. And we've got a line looking something like that. All right. And that one is going to be skinny Hendrix's demand and notice that they look different, right? Because everyone's demand curve is gonna be a little different. So there's his demand, right? There, just the same. His quantity demanded at a price of six. His quantity demanded would be two pizzas. So to make our market demand, what we're gonna do is we're gonna sum these graphs and I'm gonna go ahead and do plus and over here equals and we're gonna go down to our market demand curve. And here we're gonna put in our points from the market demand above. So this is the sum of fat Albert and skinny Hendricks here, I got space. I'm coming back in. All right, let's do this. So, we've got at a price of 10 on our on our table there. We we calculated that market demand was gonna be 20. Excuse me. Um at a price of $2. So let's first label our axis price and quantity always want to do that first. Okay, here we go. Price of two quantity demanded 20 price of four, quantity demanded 15, price of six, quantity demanded 10, price of eight quantity demanded five and price of 10. Nobody wants pizza. Cool. Well there you go. This is gonna be our market demand curve here and this is the sum of everybody in the market, which in this case was just these two people. So we've got market demand and you can imagine if there was thousands of people in the market, we would be doing this thousands of times. But this is just the idea of what's happening. So here a little summary when you're asked to find the market demand, you just got to some the individual demand curves at the different prices and different quantities. Cool, Alright, let's move on.
