If the consumption decisions of individual consumers are not independent, then the horizontal sum of individual consumer demand curves is the market demand curve for the commodity.

Question

Quizplus · Accepted Answer

The horizontal sum of individual consumer demand curves assumes that consumption decisions are independent. If they are not independent, external factors like network effects or consumption externalities affect individual demands, making the simple horizontal summation inaccurate for representing market demand.

If the Consumption Decisions of Individual Consumers Are Not Independent