Differentiate between individual demand and market demand giving examples each
Individual demand refers to the quantity of a product or service that an individual consumer is willing and able to buy at a specific price, while market demand refers to the total quantity of a product or service that all consumers in a market are willing and able to buy at a specific price.
Example of individual demand:
Let's say a person named Mary is interested in purchasing a new smartphone. She has a budget of $500 and is willing to pay up to that amount. Mary's individual demand for the smartphone is determined by her preferences, income, and price. If the price of the smartphone is $400, Mary may be willing to buy one unit. However, if the price increases to $600, Mary may no longer be able to afford it and her demand for the smartphone would decrease to zero.
Example of market demand:
Now, let's consider the market demand for smartphones. In this case, we consider the sum of all the individual demands for smartphones at each price level. Assuming there are many potential buyers like Mary in the market, we can calculate the market demand. If at $400, Mary is willing to buy one unit of smartphone, and there are ten other buyers in the market who are also willing to buy one unit at that price, then the market demand at $400 would be eleven units. However, if the price increases to $600 and none of the potential buyers are willing to purchase the smartphone, then the market demand at that price would be zero units.