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 Demand in Output in Product/Output... From Household Demand to Market Demand

In economics, we are usually concerned with the overall demand for products rather than the demand on the part of individual households. To get the market demand for a good, we just need to add up the quantities demanded at each price for all the households that are consuming the good.

Consider the following illustration:

We simplify things by assuming that only three households consume coffee and we show their demand curves. Now, let us determine how much coffee will be purchased per month at different prices.

At \$1.50 per pound, Household A will buy 8 pounds per month, Household B will buy only 3 pounds, and Household C will buy 9 pounds. So, at \$1.50 per pound, the quantity demanded for this market will be 20 (8 + 3 + 9).

Similarly, we can figure that at a price of \$3.50 per pound, a total of only 8 pounds per month will be purchased in this market (4 + 0 + 4).

To more fully understand how the market demand curve is derived, try the following active graph exercise:

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