The core theoretical principle asserts that market demand curves do not necessarily obey the Law of Demand (downward slope) under general aggregation conditions because changing relative prices alters income distribution among consumers with heterogeneous tastes and endowments. Formal analysis via proof by contradiction demonstrates that deriving a stable, downward-sloping aggregate demand curve requires impossible constraints, such as homothetic preferences parallel across all agents or identical consumer functions reducing the entire economy to a single representative agent. This concept belongs to microeconomic theory regarding aggregation and revealed preference, specifically challenging the validity of standard supply-demand equilibrium models in macroeconomics where the economy is modeled as a unified utility-maximizing entity.
The core theoretical principle asserts that market demand curves do not necessarily obey the Law of Demand (downward slope) under general aggregation conditions because changing relative prices alter…