Definition requires statement of the nature and number of both as well as close substitutes in production and consumption. In theory, the market is defined without reference to geography. The size of the market affects factors such as minimum optimum scale of production. The amount of a commodity buyers are willing to purchase at each specified price in a given market at a given time. The market demand curve is the horizontal summation of individual demand curves.
Individual demand is the key initiator of the production process.
It is independent of all factors other than the preference curve, prices and income constraint. The amount of a commodity sellers are willing to produce at each specified price in a given market at a given time. The market supply curve is the horizontal summation of individual firm supply curves. Supply is identical to the rising section of the marginal cost curve of the firm. Market Equilibrium Equilibrium in a market is established where the demand curve intersects the supply curve.