Demand Function

Demand

The quantity of a commodity that a consumer is willing and able to buy for a certain period of time at a given market price is referred to as the demand for that item. The quantity of anything at a certain price that will be purchased per unit for a while at that price is how much there is demand for it.

Types of Demand

• Price demand: While other factors are constant at a given time, it refers to the varying quantities of an item that consumers purchase at various prices. It establishes that price and demand have a negative relationship.
• Income demand: With all other factors remaining constant at a given period, it is the varying quantities of a commodity that consumers purchase at various income levels. It creates a favorable correlation between income and demand.
• Cross demand: It is the link, when all other factors are equal, between the amount required of one commodity (let's say "X" good) and the price of related commodities (let's say "Y" good). The linked items come in two categories: complements and replacements. The price of wai-wai and the demand for mayos are directly related (substitutes). The demand for ink and the cost of pens are inversely correlated (complements).

Demand Function

The algebraic description of the demand curve is known as the demand function, which is a mathematical function that explains the quantity sought in terms of its different determinants, such as income and price. Qx is equal to f(Px, Y, Pr, A, T, C, W, Sp, Ms, Tr, Ep, etc.) in mathematics.
Where Qx is the demand for X good, f is its function, Px is its price, and Y is the consumer's income, Price of comparable goods, A stands for advertising expenditure, T for consumer taste, preference, and fashion, C for customs, W for weather, Sp for population size, Ms for money supply, Tr for tax rate, and Ep for expectation of price change.

Types of Demand Function

Demand functions essentially fall into two categories:

Single variable demand function

Single variable demand function is the name given to the mathematical relationship between the quantities desired of X and their price. Other than price, constants in this connection include income, taste, and the price of another good. Qx=a-bp OR Qx=a/pb in mathematics. further categorizing a single variable as:

• Linear Demand function: Linear Desire Function is a straightforward equation that may be used to represent the connection between a good's price and its buyers' demand for it. In the linear demand function, the slope of the demand curve remains constant (i.e., a straight line). Qx = a - bp in mathematics. Where a stands for autonomous demand and b for demand curve slope. Using Qx=70-4p, let's calculate the demand for a commodity X at various prices.

• Non-Linear Demand function: When the slope of a demand curve varies over the course of the demand curve, a demand function is said to be non-linear or curved. A power function is typically used to express a non-linear demand function. Qx=a/Pb in mathematics. Where a stands for autonomous demand and b for demand curve slope. Let's calculate the demand for a commodity X at various prices using the X-axis and Qx=300/p1. The demand curve (DD), which establishes the connection between price and quantity demanded, is the demand curve. Here, the buyer requests 50 kg of mangoes for Rs 5. The quantity demanded decreased from 50 kg to 30 kg as the price increased from Rs. 5 to Rs. 10. In a similar manner, the quantity requested decreased from 30 kg to 10 kg when the price increased from Rs. 10 to Rs. 15. As a result of the inverse relationship between price and quantity demand for an item, the demand curve (DD') slopes downward.

Multi-variable Demand function: The mathematical relationship that explains the relationship between the quantity required and its different variables, such as income, the cost of the same items and other goods, consumer taste, preference, and fashion, population number, etc. Demand function with several variables. For instance: Qx equals a - Px, Pm, Po, and T. Where Qx is the quantity of apples desired, an is autonomous demand, Px is the apple's price, Pm is the mango's price, Po is the orange's price, and T is the time dispersion.

Movement along the demand curve: The Law of Demand is explained by movement along the demand curve. Therefore, the term "movement along the demand curve" can be defined as "the state of increase or reduction in amount demanded due to fall or rise in price maintaining other elements fixed or same." It describes how, along the same demand curve, the price-quantity combination changes from one point to another. Any product's price will alter demand in this curve, which has an inverse relationship.

Shift in Demand curve: Change in the demand curve's position is referred to as a shift in the demand curve. Either to the right or to the left, the demand curve will slant. Due to non-price factors like population size, consumer tastes and preferences, changes in the money supply, consumer income, etc., a shift to the right implies increased demand, whereas a shift to the left suggests decreased demand.

Reference

Koutosoyianis, A (1979), Modern Microeconomics, London Macmillan