Which of the following statements about market demand is NOT correct?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → At each quantity, the market demand is found by adding the prices the consumers would pay.

Market demand adds the quantities that consumers demand at the same price.

Option (1) If two consumers each demand 5 units at a price, the market demand at that price is 10 units. — True. At that price, 5 + 5 = 10 units.

Option (2) At each quantity, the market demand is found by adding the prices the consumers would pay. — False. Market demand fixes a price and adds the quantities demanded; prices are never added.

Option (3) The market demand at a price is the total demand of all consumers at that price. — True. This is what market demand means.

Option (4) The market demand curve is a horizontal summation of the individual demand curves. — True. The curves are added sideways, along the quantity axis.

NCERT (2026-27): “2.5 Market Demand … The market demand for a good at a particular price is the total demand of all consumers taken together. The market demand for a good can be derived from the individual demand curves. Suppose there are only two consumers in the market for a good. Suppose at price p′, the demand of consumer 1 is q′1 and that of consumer 2 is q′2. Then, the market demand of the good at p′ is q′1 + q′2. … Thus, the market demand for the good at each price can be derived by adding up the demands of the two consumers at that price. If there are more than two consumers in the market for a good, the market demand can be derived similarly. The market demand curve of a good can also be derived from the individual demand curves graphically by adding up the individual demand curves horizontally as shown in Figure 2.18. This method of adding two curves is called horizontal summation.”