Horizontal Summation | Econ Academy

Individual demand curves tell us what each consumer wants at every price. But markets have many consumers. The market demand curve is constructed by adding up all individual quantities demanded at each price level. Because we’re adding quantities (the horizontal axis) at each given price (the vertical axis), this process is called horizontal summation.

The procedure: pick any price level $P$ . Read off how much Consumer 1 demands ( $Q_{1}$ ), how much Consumer 2 demands ( $Q_{2}$ ), and so on. Market demand at that price is $Q_{ma r k e t} = Q_{1} + Q_{2} + \dots + Q_{n}$ . Repeat for every price and connect the dots. The result is the market demand curve — it’s always at least as far right as any individual demand curve, and often further.

Interactive — Market Demand = Horizontal Sum

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Step-by-step construction of the market demand curve from two individual demands, with the same numbers as the worked example below.

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The Kink in Market Demand

When consumers have different reservation prices (the maximum price at which they’re willing to buy), the market demand curve has kinks. Above Consumer B’s reservation price, only Consumer A is in the market, so market demand = A’s demand. Below that threshold, both consumers are active, and the market demand curve becomes flatter (more elastic) because each price drop attracts quantity from two buyers instead of one.

Market demand at any price P is the sum of all individual quantities demanded

Market demand is usually more elastic than any single consumer’s demand, and the reason is simple. A small price drop does two things at once: it makes the people already buying purchase more (moving along their own demand curves), and it pulls in fresh consumers whose reservation prices sat just above the old price. Two channels for new quantity, instead of one.

Worked Example

Consumer A has demand $Q_{A} = 20 - 2 P$ (for $P \leq 10$ ). Consumer B has demand $Q_{B} = 12 - P$ (for $P \leq 12$ ). Find the market demand function and the quantity demanded at $P = 8$ and $P = 11$ .

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If all consumers have identical demand curves, will the market demand have kinks?

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Practice · 1 / 4

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Practice horizontal summation:

Horizontal summation means we add individual demand curves by summing:

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