Derivation of Market Demand Curve |
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| Ans : (i) Market demand schedule
Ans:- It is a table that shows various quantities of a commodity that all the consumers are able and willing to purchase at various prices and at particular period of time and place. A market demand schedule is presented below:
Price Demand ‘A’ Demand ‘B’ Demand ‘C’ Market demand
12
10
5
15
10+5+15=30
10
20
10
20
20+10+20=50
8
30
15
25
30+15+25=70
6
40
20
30
40+20+30=90
4
50
25
35
50+25+35=110
2
60
30
40
60+30+40=130
In the above table it is clear that there is negative relation between price and market demand. . At initial price Rs.12 quantity demand of ‘A’ is 10 units, ‘B’ is 5 units, ‘C’ is 15 units and marker demand is 30. When price decreases to Rs.10 quantity demand of ‘A’ increases to 20 units, quantity demand of ‘B’ increases to 10 units, quantity demand of ‘C’ increases to 20 units, and market demand increases to 50. Again when price decreases to Rs.8 quantity demand of ‘A’ increases to Rs.30 units, ‘B’ increases to 15 units, ‘C’ increases to 25 units and market demand increases to 70 and so on.
(ii) Market demand curve
Ans:- It is the diagrammatic representation of various quantities of a commodity that a consumer is able and willing to purchase at various prices and at particular period of time and place. A market demand curve is presented below:
In the above diagram, OX-axis represent quantity demand and OY-axis represent price. MD is a market demand curve. DA, DB and DC is demand curve of A, B and C respectively. At initial price Rs.12 quantity demand of ‘A’ is 10 units, ‘B’ is 5 units, ‘C’ is 15 units and marker demand is 30. When price decreases to Rs.10 quantity demand of ‘A’ increases to 20 units, quantity demand of ‘B’ increases to 10 units, quantity demand of ‘C’ increases to 20 units, and market demand increases to 50. Again when price decreases to Rs.8 quantity demand of ‘A’ increases to Rs.30 units, ‘B’ increases to 15 units, ‘C’ increases to 25 units and market demand increases to 70 and so on. This shows that there is negative relationship between price and market demand.
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