Demand Function

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.,