 # Demand

Economics
Summary

## Two Approaches to Demand

Summary Two Approaches to Demand

### The Graphical Approach

Economists graphically represent the relationship between product price and quantity demanded with a demand curve. Typically, demand curves are downwards sloping, because as price increases, buyers are less likely to be willing or able to purchase whatever is being sold. Each individual buyer can have their own demand curve, showing how many products they are willing to purchase at any given price, as shown below. This graph shows what Jim's demand curve for graham crackers might be:

To find out how many boxes of graham crackers Jim will buy for a given price, extend a perpendicular line from the price on the y-axis to his demand curve. At the point of intersection, extend a line from the demand curve to the x-axis (perpendicular to the x-axis). Where it intersects the x-axis (quantity) is how many boxes of graham crackers Jim will buy. For instance, in the graph above, Jim will buy 3 boxes when the price is \$2 a box.

### Aggregate Demand and Horizontal Addition

Typically, economists don't look at individual demand curves, which can vary from person to person. Instead, they look at aggregate demand, the combined quantities demanded of all potential buyers. To do this, add the quantities which buyers are willing to buy at different prices. For instance, if Jim and Marvin are the only two buyers in the market for graham crackers, we would add how many they are willing to buy at price p=1 and record that as aggregate demand for p=1. Then we would add how many they are willing to buy at price p=2 and record that as aggregate demand for p=2, and so on. This results in the following graph of aggregate demand for graham crackers: