Question

Define demand function. what are the different types of demand function

Answer 1

price of commodity.
consumer's income.
future expectations about future price & income.
price of substitute goods.
price of complementary commodities

Answer 2

DEMAND FUNCTION

Demand function choose the relationship between demand for a commodity and its various determinants. It shows how demand for a commodity is related to say, own price of the commodity or income of the consumer or other determinants.

Corresponding to two aspects of demand, viz., individual demand and market demand we have two types of demand function:

• Individual demand function and
• Market demand function

Individual demand function

Individual demand function shows how demand for a commodity by an individual consumer in the market is related to its various determinants. It is expressed as under:

Dx = f (Px, Pr, Y, T, E)

(here, Dx = quantity demand of commodity-X; Px = Own price of commodity-X; Pr = Price of related goods; Y = consumer's income; T = consumer's tastes and preferences; E = consumer's expectations)

Market Demand function

Market demand function shoes how market demand for a commodity is related to its various determinants. Or, it shows the relationship between market demand for a commodity and its various determinants. It is expressed as under:

Mkt. Dx = f (Px, Pr, Y, T, E, N, Yd)

(here,Mkt.Dx = market demand of commodity-X; Px = Own price of commodity-X; Pr = Price of related goods; Y = consumer's income; T = consumer's tastes and preferences; E = consumer's expectations; N= population size/number of buyers; Yd = distribution of income)