Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsDemand2 Marks
Question
What is demand function?
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Answer
Demand function:
The cause and effect relationship between demand and its various factors can be expressed as a mathematical function.
The demand function is a mathematical function between demand for a good and the determinants that affect its demand.
The demand function shows that demand for a good is dependent on many factors such as price of the good, tastes and preferences of a consumer, income of the consumer, prices of related good, size of the population, etc.
The mathematical form of the demand function:
$D_x=f\left(P_x, P_y, P_e, T, Y, U\right)$
Where $D _x=$ Demand for commodity $X$
$f =$ Functional notation
$P _{ x }=$ Price of commodity $X$
$P_y=$ Price of related commodity $Y$
$P _{ e }=$ Expectations regarding future price
$T =$ Tastes and preferences of the consumer
$Y =$ Consumer's income
$U =$ Other factors
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