Calculating & Using the Market Demand Curve in Microeconomics

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Substitution & Income Effects: Impacts on Supply & Demand

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:02 What Is the Market…
  • 1:04 Shifts in the Curve
  • 2:54 Why Producers Care
  • 4:30 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Speed Speed Audio mode
Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance. He has since founded his own financial advice firm, Newton Analytical.

Wouldn't it be handy to producers if they had a way of determining the demand curve for a whole market in a given area? Luckily, the market demand curve gives them precisely such a tool.

What is the Market Demand Curve?

Imagine that you are able to visit the market for every conceivable supplier of chocolate. Quite the good day you're having! So all of these chocolate suppliers are gathered here in this one market, waiting for all the people who demand chocolate to come by and purchase their treats. Now you already know your own demand curve for chocolate, with the general theory that the more each piece costs, the less you will want to buy. The thing is that you are not alone in that. Every other purchaser who walks into this hypothetical hall of happiness has the same general chart in his or her head as well. Some look different, some look similar, but everyone has roughly the same shaped chart. Now if you were able to combine everyone's charts, you'd end up with a pretty good idea of what the market demands. That is exactly what the market demand curve does - it shows the demand of all purchasers within a given market.

Shifts in the Curve

Just like any other demand curve, the market demand curve is capable of experiencing shifts. Now, these shifts can come as a result of a single consumer or subset of consumers, or as the result of a general consensus among all people demanding a given good. Think about it like this - if suddenly you decided that you preferred caramels to chocolate, you would demand less chocolate. This would mean that by whatever degree your individual demand changed for chocolate, the same quantity would apply itself to the market demand curve.

Note that I said 'quantity' and not 'percentage.' Markets are often so large that the demand of one or two consumers is not really felt. In fact, it is only in a handful of sectors, like government contracting, that, because there is only a small number of consumers (the federal government in this case), real change is felt when a small number of people change their demand. Likewise, if you suddenly decided that you needed a great deal more chocolate, then your increased demand would shift the market demand curve to the right, albeit only a small nudge in the grand scheme of things.

But what about if many people change their minds? Here too the market demand curve can shift. What if a famous celebrity declares chocolate to be disgusting? Or if the substance is linked to health risks? This could cause a much larger shift of the demand curve because it is affecting more people. In this case, because the demand is decreasing, it would shift to the left. The large shift holds true if the opposite happens, in that shifts that cause many people to buy more chocolate will shift the demand curve to the right.

To unlock this lesson you must be a Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account