Derivation of Individual and Market demand curve.

Derivation of Individual Demand Curve... 

Individual demand curve can be derived with the help of individual demand schedule. In case of individual consumer also, demand increases when price decreases and vice versa other factors remaining the same. It may be defined as tabular presentation of various units of price and quantity demanded for a commodity by a consumer during a certain period of time, other factors remaining the same. It is presented in the following schedule:

Schedule of Individual demand.. 

In the above schedule, it is seen that a consumer demanded 1 kg of a commodity when price of the commodity is Rs. 10 per kg. When price decreases from Rs. 10 per kg to Rs. 8,Rs.6, Rs. 4 and Rs. 2 per kg, the quantity demanded for the commodity increases from 1 kg to 2 kg, 3 kg, 4 kg and 5 kg respectively. The table clearly shows the inverse relation between price and quantity demanded for a commodity. If we present the schedule in the form of diagram, we will get individual demand curve as shown in the figure:

    In the above figure, DD is the individual demand curve which is downward sloping and indicates that the inverse relation between price and quantity demanded in case of individual consumer. 

Derivation of Market Demand Curve.... 

Market demand curve can be derived with the help of market demand schedule. Market consists of large number of consumers. Every consumers have their own demand schedule and curve. If they are horizontally sum up, we will get market demand schedule and curve. Let us suppose that market consists of only 3 consumers i.e A, B and C for a particular commodity. Now, the market demand schedule is shown as:

Schedule of Market Demand:

 In the above schedule, it is seen that the consumer demanded 8 kg of a commodity when the price of the commodity is Rs. 10 per kg. When price of the commodity decreases from Rs. 10 to Rs. 8,Rs. 6,Rs.4 and Rs. 2 per kg, the quantity demanded for the commodity increases from 8 kg to 16 kg, 24 kg, 32 kg and 40 kg respectively. The table clearly shows the inverse relation between price and quantity demanded for a commodity by the consumers. If we presented the schedule in the form of diagram, we will get market demand curve as shown in the figure:

In the above figure, DD is the market demand curve which is the horizontal summation of individual consumer A, B and C. It is also downward sloping. It indicates that the inverse relation between price and quantity demanded in case of various consumers of a commodity.