Horizontal summation
Topic: Consumer Behaviour, Demand and Elasticity · NCERT: Class 12, Ch 2 "Theory of Consumer Behaviour"; Class 12, Ch 4 "The Theory of the Firm under Perfect Competition"; Class 12, Ch 5 "Market Equilibrium"
Meaning
Horizontal summation is the method for building a market curve from individual curves. At each price, you add up the quantities of all buyers (or all sellers). Quantity is on the horizontal axis, so the adding is done sideways. Prices are never added. At each price, include only the people who actually buy at that price. This is why the market curve can have a kink, which is a sudden bend.
Example
At ₹100 per kg, Srivalli buys 2 kg of mangoes, Alex buys 4 kg and Israt buys 6 kg. So market demand at ₹100 is 12 kg. Now take two demand curves, d₁ = 10 − p and d₂ = 15 − p. Market demand is 25 − 2p for prices up to ₹10. Between ₹10 and ₹15 only the second buyer is left, so market demand is 15 − p. The curve bends at p = 10, where q = 5.
Don't confuse with
- Vertical summation: adding prices at a given quantity. This is wrong for market demand or supply of ordinary goods.