Question

Explain the law of demand. Why does a demand curve slope downward? How is a market demand curve derived from individual demand curves?

Answer 1

Law demand implies the relationship between price and quantity demanded. At the higher price, lesser quantity demanded and at lower price, more quantity is demanded.

Demand curve slopes downward suggests invese relationship between price and quantity demanded. For increasing quantity demanded, price must be lowered

Market is aggregation of individuals. Thus, for deriving market demand curve, all individual demand curves are added vertically. Hence, aggregate demand is vertical summation of all individual demand curves.