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### Course: Microeconomics>Unit 8

Lesson 2: Changes in factor demand and supply

# Adding demand curves

In this video we explore how to derive the demand for a factor of production based on how productive that factor is and how much additional revenue that factor brings in. Created by Sal Khan.

## Want to join the conversation?

• At ,　can anyone else explain a little more?
I haven't understand when the adding is useful.
I would appreciate you beforehand, thanks.
• It's just like market demand curves for products. To get the the market demand curve for bread, for example, we add up every person's (in the maket) demand curve for bread. The supply curve could then be added to show equiibrium price of bread. Similarly, to get the market demand curve for car washers, we add up all the firms' (in the market) demand for car washers. From this, we could derive equilibrium wage by also drawing in the supply curve (i.e. how many people are willing to be employed at every given wage level).
• Thanks! graphing was intuitive. Could you please give some formulas as well?
• Sure, but they might be a bit underwhelming. It all has to do with how you set up the functions. If you let price be the independent variable—as it should be, despite its position on the vertical axis—then we have two functions Q_1(P) and Q_2(P) for the two firms. Then the total market demand is Q_total(P) = Q_1(P) + Q_2(P). If you plot this with Q_total on the horizontal axis and P on the vertical axis, you'll get the same graphs as above.
• Why is the combined curve have two linear parts? Why is it not at curve?
I don't get it.
Thank you ;)
• I still don't understand how you add up the horizontal demand curves, and how do you know what it looks like?
• I thought if you were talking about the market it is big Q, but if you are labelling specific firms in the market, do you not use little q's? I have noticed the same thing in the comments.
• When you have "complex" curves like this, how do you determine market equilibrium? All the examples I can find simplify things and use normal linear curves for supply and demand.
• We would have to have more information/parameters regarding the supply/supply curve, then graph that curve and find the intersection point between the supply curve and the demand curve in order to find the market equilibrium between supply and demand.
(1 vote)
• What about subtracting a demand curve? I need to answer the folling question: The aggregate demand of two consumers is p(q)=7-q. One of them lives the market, his/her individual demand curve was p(q')=4-2q'. What is the remaining aggregate demand curve i.e. the demand of the person who remains in the market? (Actually I need to compute the loss of consumer surplus in a competitive market and constant marginal cost equal 3, but I think can do that if I find de demand curve)
I drew this (inverse) curve in red: https://www.desmos.com/calculator/lihgzsqeec
But I believe it's not right.
(1 vote)
• Wait! O_O
Why is firm 2's graph so different?
Why doesn't price equal quantity?
(1 vote)
• If individual demand curves are added up like this to get the whole market's demand, how does it work in perfect competition? In PC, each firm has a demand curve that is essentially horizontal at the equilibrium price, but somehow adding that all up gives you a downward sloping demand curve for the market?
(1 vote)
• for this example car wash business it shows they make ten dollars an hour and as they hire more the extra person becomes less helpful but u also have taxes, the price of the cleaner, the land or building u wash cars at. so basically its hard to make money if you have 2 or more employees