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How to create a formula for the demand function

How to create a formula for the demand function

Demand, as well as any other market mechanism has its own characteristics and functions.

Each of us is faced with demand almost every hour, but no one can describe this concept.



What is the demand? The demand - is the willingness of customers to purchase the product at a specified price and at a certain time. However, this term should not be confused with the "magnitude of demand." This concept refers to the amount of goods and services that consumers are willing to buy at an established price.


As with any system, the market includesZakonova number of principles. In this situation, we are interested in the law of demand. It states that the quantity demanded is inversely proportional to price. In other words, the higher the price of the goods, the less people want to buy it.


It should be noted that there are manyfactors affecting the quantity demanded. This includes the price of the goods, prices of other goods, consumer incomes, tastes and preferences, market information, advertising on goods and so on. Thus, we gradually come to such a concept, as a function of demand. It represents the dependence of demand on various factors Q d & nbsp - = & nbsp-f & nbsp- (P, P & nbsp-s & nbsp-1 & nbsp- ... P & nbsp-s & nbsp-n & nbsp-, Р&nbsp-c&nbsp-1&nbsp-…Р&nbsp-c&nbsp-m&nbsp-,&nbsp-I&nbsp-,&nbsp-Z&nbsp-,&nbsp-N&nbsp-,&nbsp-Inf&nbsp-,&nbsp-R, T, E & nbsp-), where Qd - the volume of demand. Since the price of goods is one of the most important factors, the demand function can be written as follows: Qd = f (P), where P - price.


When the demand function is linear, that is,is shown as a straight line on the graph, it can be found from the formula: Qd = a-b * p (a - the maximum possible demand for this product, b - dependence of demand on price, p - the price). The minus sign in this equation shows that the demand function has a negative slope. Therefore, it is possible to represent graphically the demand function (Fig. 1)


The demand curve represents the relationship between thethe magnitude of demand for this product and the market price. Action price factors leads to changes in the demand by moving it to the other points on the constant demand curve. The action of non-price factors leads to a change in the demand function and is expressed in shifting the demand curve to the right (if it grows) and the left (if it falls).

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