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How to formulate the demand function formula


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

Each of us is facing demand almost hourly, but not everyone can describe this concept.



What is demand? Demand is the willingness of buyers to purchase a product at a specified price and at a certain point in time. But this term should not be confused with the "size of demand". This concept denotes the number of goods and services that the consumer is willing to buy at a steady price.


As in any system, the market includesA number of principles. In this situation, we are interested in the law of demand. It says that the magnitude of demand is inversely proportional to price. In other words, the higher the price of a product, the less people want to buy it.


It should be noted that there are manyFactors that affect the magnitude of demand. These include the price of this product, prices for other goods, consumer incomes, tastes and preferences, market information, advertising for goods and so on. Thus, we smoothly approached this concept, as a function of demand. It denotes the dependence of demand on the various factors Q & A & b & nbsp-c & nbsp-n & nbsp-, & nbsp-c & nbsp-n & pbsp; - & nbsp-I & nbsp; , & Nbsp-Z & nbsp ;, & nbsp-N & nbsp ;, & nbsp-R, T, E & nbsp;), where Qd is the volume of demand. Since the price of the goods is one of the most important factors, the demand function can be written in the following form: Qd = f (P), where P is the price.


When the demand function has a linear form, that isIs represented as a straight line in the graph, it can be found by the formula: Qd = a-b * p (a is the maximum possible demand for a given product, b is the dependence of the change in demand on the price, p is the price). The minus sign in this formula shows that the demand function has a decreasing form. Consequently, the demand function can be depicted graphically (Figure 1)


The demand curve denotes the interdependence betweenThe amount of demand for a given product and the market price. The effect of price factors leads to a change in demand, moving it to other points along a constant demand curve. The effect of non-price factors leads to a change in the demand function and is expressed by shifting the demand curve to the right (if it grows) and to the left (if it falls).

How to formulate the demand function formula Was last modified: May 21st, 2017 By Tazraowx
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