derive the market demand curve.
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The market demand curve is obtained by adding together the demand curves of the individual households in an economy. As the price increases, household demand decreases, so market demand is downward sloping. The market supply curve is obtained by adding together the individual supply curves of all firms in an economy.
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Explanation:
The market demand curve is obtained by adding together the demand curves of the individual households in an economy.
As the price increases, household demand decreases, so market demand is downward sloping.
The market supply curve is obtained by adding together the individual supply curves of all firms in an economy.
As the price increases, the quantity supplied by every firm increases, so market supply is upward sloping.
A perfectly competitive market is in equilibrium at the price where demand equals supply
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