Price–demand function

Definition

The price–demand function represents the relationship between the price of a good or service and the quantity demanded by consumers. It is typically expressed as $p = f(x)$, where $p$ is the price and $x$ is the quantity demanded.

5 Must Know Facts For Your Next Test

1. The price–demand function is often used to model consumer behavior in economics.
2. Integrating the price–demand function can yield total revenue, which is $\int p(x) \, dx$.
3. If the price–demand function includes exponential or logarithmic forms, specific integration techniques are applied.
4. The elasticity of demand can be derived from the price–demand function to measure responsiveness of quantity demanded to changes in price.
5. The inverse of a linear price–demand function can also be considered a demand curve.

Review Questions

• How do you integrate a given exponential or logarithmic price–demand function?
• What economic insights can be derived from integrating the price–demand function?
• Describe how elasticity of demand relates to the price–demand function.

Related terms

Total Revenue: The total amount of money received from sales, calculated as $R(x) = x \cdot p(x)$.

Elasticity of Demand: A measure of how much the quantity demanded responds to changes in price, calculated as $E(p) = \left| \frac{dp/dx}{p/x} \right|$.

Demand Curve: A graph showing the relationship between the quantity demanded and its price for a given good or service.