Demand Curve – Individual & Market Demand Curve
The demand curve is one of the most important tools in Business Economics. It helps managers visualise how quantity demanded changes with price.
1. Individual Demand Schedule & Curve
An individual demand schedule shows how much one consumer is willing to buy at different prices.
Example: Monthly demand for mobile data pack by one student.
| Price per pack (₹) | Quantity demanded (packs) |
|---|---|
| 300 | 1 |
| 250 | 2 |
| 200 | 3 |
| 150 | 4 |
| 100 | 5 |
From this we plot the individual demand curve with:
- Price on Y-axis (vertical)
- Quantity on X-axis (horizontal)
The curve will slope downwards from left to right showing the inverse relationship between price and quantity demanded.
2. Market Demand Schedule & Curve
Market demand is the sum of quantities demanded by all consumers in the market at each price.
Suppose there are two consumers, A and B.
| Price (₹) | Qd by A | Qd by B | Market Qd (A+B) |
|---|---|---|---|
| 300 | 1 | 2 | 3 |
| 250 | 2 | 3 | 5 |
| 200 | 3 | 4 | 7 |
| 150 | 4 | 5 | 9 |
| 100 | 5 | 6 | 11 |
The market demand curve is obtained by horizontal summation of all individual demand curves.
3. Shape of Demand Curve
- Generally downward sloping from left to right.
- Reasons (brief):
- Law of Diminishing Marginal Utility
- Income effect of price change
- Substitution effect of price change
- New buyers entering the market when price falls
These are discussed in detail under Law of Demand.
4. Individual vs Market Demand Curve – Comparison
Individual Demand Curve
- Shows demand of one consumer
- Based on individual demand schedule
- Quantity demanded is smaller
- More elastic in many cases
- Used for studying behaviour of a single buyer
Market Demand Curve
- Shows demand of all consumers in the market
- Based on market demand schedule (sum of individual demands)
- Quantity demanded is larger
- Relatively less elastic
- Used for analysing demand conditions of the whole market
5. Quick Revision Points
- Demand schedule: table; demand curve: graphical representation.
- Individual demand curve: demand of one consumer.
- Market demand curve: horizontal sum of individual demand curves.
- Both usually slope downwards due to inverse relation between price and quantity demanded.
6. Quiz Time 🎯
Test Your Knowledge
Question 1 of 5
1. In a demand curve diagram, price is taken on: