## Demand Function

An algebraic expression which shows the relationship between demand for a commodity and its various determinants that affect this quantity is known as demand function. For its proper understanding, you have to know about **theory of demand**. These are of two types:

### 1. **Individual Demand Function **

It refers to the quantities of a commodity which are demanded by an individual at various prices, his income, prices of related goods and tastes. It is expressed as:

D = f(P)

### 2. **Market Demand Function **

It is the basis of demand theory. But it is the function that is main interest to managers. It refers to the total demand for a good or service of all the buyers taken together. It may be expressed mathematically.

Dx = f (Px, Pr, M, T, A, U)

Where, Dx = Quantity demanded for commodity x

f = Functional relation

Px = Price of commodity x

Pr = Prices of related commodities, i.e ., substitutes and complementary

M = Money income of the consumer

T = Taste of the consumer

A = Advertisement effect

U = Unknown variables

Economists mean the entire functional relationship. This means the whole range of price quantity relationship and not just the quantity demanded at a given price per unit of time. It is expressed above is really just a listing of variables that affect the demand. It must be made explicit and clear for use in managerial decision-making. The industry must have reasonably good knowledge and information about it formulates effective long-run planning decisions and short-run operating decisions.

### What is Demand Function With Example?

A demand function is a mathematical function that describes the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase. **For example**, the **demand** function for apples might be Q = 100 – 2P, where Q is the number of apples (in millions) and P is the price of apples (in dollars).

### What are the Properties of Demand Function?

Properties of a demand function:

1. The demand function is always downward sloping.

2. It shows the functional relationship between quantity demanded and price.

3. The demand function is linear when plotted on a graph.

4. It is a mathematical function.

### What are the 3 Concepts of Demand?

The three concepts of demand are quantity demanded, demand schedule, and the law of demand.

1. The quantity demanded is the amount of a good that consumers can purchase at a given price.

2. The demand schedule is a table that shows the quantity demanded at different prices.

3. The law of **demand forecasting** is the principle that all else being equal, the quantity demanded of a good falls when the price of the good rises.