DEMAND FUNCTION:
Demand
function -- a behavioral relationship between quantity consumed and a person's
maximum willingness to pay for incremental increases in quantity. It is usually
an inverse relationship where at higher (lower) prices, less (more) quantity is
consumed. Other factors which influence willingness-to-pay are income, tastes
and preferences, and price of substitutes
Individual Demand function
Qdx =
f(Px, Y, P1……Pn-1, T, A ,Ey, Ep, u)
Where
Qdx= qty
demanded for the product X
Px =
price of the product
Y = level
of household income
P1….Pn-1
= price of all the other related products
T =
tastes of the consumer
A =
advertising
Ey =
consumer‘s expected future income
Ep=
consumer‘s expected future price
U= all
those determinants that are not covered in the list determinants
Market Demand function
Qdx =
f(Px, Y, P1……Pn-1, T, A ,Ey, Ep, P, D, u)
Qdx,Px,Y,P1…Pn-1,T,A,
Ey,Ep,U are the same as the individual demand function
P =
population
D =
distribution of consumers in various categories such as income, age, sex etc.,
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