What is demand equation? |
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Ans : It is the mathematical expression of the relationship between demand for a commodity and its determinants. Since, there is negative relationship between price of a commodity and its quantity demand. Simple linear demand equation takes the following form:
Dₓ = a-b.Pₓ
Where,
Dₓ = Demand for commodity x
Pₓ = Price of commodity x
a = autonomous demand
b
Since, there is negative relationship between price and quantity demand, the slope of demand curve (b) is always negative.
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