The Market Demand Curve: Definition, Equation & Examples

  • Lesson
  • Quiz
  • Like?
Taught by

Kallie Wells

What is the market demand curve and how is it derived? This lesson will explain the concept of a market demand curve and show you how one would go about creating the curve.

We also recommend watching The Money Market: Money Supply and Money Demand Curves and Understanding the Demand Curve in Microeconomics

Definition

The market demand curve is the summation of all the individual demand curves in a given market. It shows the quantity demanded of the good by all individuals at varying price points. For example, at $10/latte, the quantity demanded by everyone in the market is 150 lattes per day. At $4/latte, the quantity demanded by everyone in the market is 1,000 lattes per day. The market demand curve gives the quantity demanded by everyone in the market for every price point. The market demand curve is typically graphed and downward sloping because as price increases, the quantity demanded decreases. It can also be provided as a schedule, which is in table format.

Equation

To determine the market demand curve of a given good, you have to sum all the individual demand curves for the good in the market. The following is the algebraic equation for market demand. The quantity demanded (Q) is a function of price (P) and it is summing all the individual demand curves (q), which are also a function of price. The subscripts one through n represent all the individuals in the market.

Market Demand

Examples

To make things easy, let's assume we have two people in the market for lattes (we all know this is extremely simplified!), Jack and Jill. The table below shows the individual demand schedules for lattes. The column on the far right is the summation of the individual demand curves, which becomes the market demand curve.

Market Demand Schedule

Unlock Content Over 8,500 lessons in all major subjects

Get FREE access for 5 days,
just create an account.

Start a FREE trial

No obligation, cancel anytime.

Want to learn more?

Select a subject to preview related courses:

Start your free trial to take this quiz
As a premium member, you can take this quiz and also access over 8,500 fun and engaging lessons in math, English, science, history, and more. Get access today with a FREE trial!
Free 5-day trial
It only takes a minute to get started. You can cancel at any time.
Already registered? Login here for access.


  • Business Courses
  • Supplemental Lessons
  • Popular Articles

Search Our Courses

Did you like this?
Yes No

Thanks for your feedback!

What didn't you like?

What didn't you like?

Education Portal Video Lessons

The smarter way to study Short videos, Real results
  • More affordable than tutoring
  • All major high school and college subjects
  • Unlimited access to all 8,500+ video Lessons
  • Study on your own schedule
Try it Free