Why is the market supply curve flatter?
Answers
Individual Demand Curve is the curve showing inverse relationship between Price and Quantity Demanded of Good for A consumer.
Market Demand Curve is the Curve showing inverse relationship between price and quantity demanded by all consumer in a given market. In other words Market Demand Curve is sum total of all individual demand Curve.
Let's say there are two consumer A and B in the market. A is demanding 12 unit of Good at price of 3₹, 9 unit of good at price of 5₹ and and 8 unit of good at price of 6₹. B is demanding 11 unit of goods at price of 3₹, 10 units of good at price of 5₹ and 7 unit of goods at price of 6₹.
Through Horizontal Summation, we can get Market Demand Curve. At price of 3₹, Market Demand is 23 units, ar price of 5₹ market demand is 19 and at price of 6₹ 15 units of good are demanded.
We can say that at each price market demand is higher than individual demand. That's why Market Demand Curve is flatter than Individual Demand Curve.
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Answer:
Market supply curve is flatter than all individual supply curves. It happens because with a change in price, the proportionate change in market supply is more than the proportionate change in individual supplies. Elasticity refers to the degree of responsiveness in supply or demand in relation to changes in price. When talking about elasticity, the term "flat" refers to curves that are horizontal; a "flatter" elastic curve is closer to perfectly horizontal.