Demand Function in Economics | Two Type

Last Updated on

1 min read

Definition: Demand Function is the relationship between the quantity demanded and the price of the commodity.

Mathematically, a function is a symbolic representation of the relationship between dependent and independent variables.

What is Demand Function?

Demand function represents the relationship between the quantity demanded for a commodity (dependent variable) and the price of the commodity (independent variable).

Let us assume that the quantity demanded of a commodity X is Dx, which depends only on its price Px, while other factors are constant. It can be mathematically represented as:

Dx = f (Px)

However, the quantitative relationship between Dx and Px is expressed as:

Dx = a – bPx

Where, a (intercept) and b (relationship between Dx and Px) are constants.

Read: What is Economics? Definition, Meaning, Assumption


Two Types of Demand Function

There are mainly two types of demand functions, which are discussed below:

Linear demand function

In the linear demand function, the slope of the demand curve remains constant throughout its length. A linear demand equation is mathematically expressed as:

Dx = a – bPx

In this equation, a denotes the total demand at zero price.

b = slope or the relationship between Dx and Px

b can also be denoted by change in Dx for change in Px

If the values of a and b are known, the demand for a commodity at any given price can be computed using the equation given above.

For example, let us assume a = 50, b = 2.5, and Px= 10: Demand function is:

Dx = 50 – 2.5 (Px) Therefore, Dx = 50 – 2.5 (10) or Dx= 25 units

Non-linear demand function

In the non-linear or curvilinear demand function, the slope of the demand curve (ΔP/ΔQ) changes along the demand curve. Instead of a demand line, non-linear demand function yields a demand curve. A non-linear demand equation is mathematically expressed as:

Dx = a (Px) – b

Dx = a/Px + c

Exponent –b of price in the non-linear demand function refers to the coefficient of the price elasticity of demand.

Read: Demand Function in Economics | Two Type


Go On, Tell Us What You Think!

Did we miss something? Come on! Tell us what you think about our article on Demand Function in Economics | Two Type in the comments section.

Recommended:

  1. What is Economics? Definition, Meaning, Assumption
  2. What is Demand? Definition, Type, Example
  3. What is Supply? Definition, Type, Example
  4. Utility in Economics | Meaning, Definition, Characteristics, Types
  5. Demand Forecasting – Concept, Steps, Factor, Importance, Limitations
  6. Production in Economics | Definition, Concept, Factors

Leave a Reply

Close
Shares