FIGURE 1 FROM INDIVIDUAL WILLINGNESS TO PAY TO MARKET DEMAND
imageIn panel A, you would be willing to pay up to $10 for your first sandwich and $4 for the second. Jane, however, is only willing to pay up to $6 for her first sandwich and $2 for a second (panel B). Placing the WTP for sandwiches by you and Jane in order from the highest to lowest value, we generate a market with two consumers shown in panel C. As more and more individuals are added to the market, the demand for sandwiches becomes a smooth downward-sloping line, shown in panel D.