Define joint demand. With the help of diagrams, explain the difference between individual demand and market demand.
When the demand for different complementary goods is created at one time, it is termed joint demand. For example, the demand for computer hardware and software is created jointly.
The individual demand curve is a curve showing different quantities of a commodity which one particular buyer is willing to buy at different possible prices of the commodity at a point of time. In the diagram given below, the quantity of commodity is given on the x-axis and the price on the y-axis. DD is the demand curve representing the individual demand schedule. The demand curve slopes downwards from left to right, indicating an inverse relationship between the price and the quantity demanded.
The market demand curve is the horizontal summation of the individual demand curves. It indicates various quantities of a commodity which all consumers in the market are willing to buy at different possible prices of the commodity at a point of time. The diagram below shows that the market demand curve represents the market demand schedule assuming two consumers A and B in the market. The market demand curve also slopes downward indicating an inverse relationship between the price and quantity demanded.