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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:
Dx = f (Px, Py, Pe, T, Y, U) Where Dx = Demand for commodity X
f = Functional notation
Px = Price of commodity X
Py = Price of related commodity Y
Pe = Expectations regarding future price
T = Tastes and preferences of the consumer
Y = Consumer’s income
U = Other factors
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