in Business and Economics In an economic situation, consider the variables are price and quantity. Let p be the unit price in rupees and x be the production (output / quantity) of a commodity demanded by the consumer (or) supplied by the producer. . .
Demand, supply, cost, revenue and profit functions Demand function In a market, the quantity of a commodity demanded by the consumer depends on its price. If the price of the commodity increases, then the demand decreases and if the price of the commodity decreases, then the demand increases. The relationship between the quantity and the unit price of a commodity demanded by consumer is called as demand function - - Applications of Differentiation and is defined as x f p = ( ) or p f x = ( ) , where x > and p > . Graph of the demand function, x = f ( p ) Obtuse angle Slope is −𝑣𝑣𝑣𝑣 x (demand) Demand curve x = f ( p ) p (Price) o Obtuse angle \ slope is negative Fig : .
The “demand - price relation- ship” curve illustrates the negative relationship between price and quantity demanded. Observations (i) Price and quantity of the demand function are in inverse variation. (ii) The graph of the demand function lies only in first quadrant. (iii) Angle made by any tangent to the demand curve with respect to the positive direction of x – axis is always an obtuse angle.
(iv) Slope of the demand curve is negative( –ve). Supply function In a market, the quantity of a commodity supplied by producer depends on its price. If the price of the commodity increases, then quantity of supply increases and if the price of the commodity decreases, then quantity of supply decreases. The relationship between the quantity and the unit price of a commodity supplied by producer is called as supply function and is defined as x = g ( p ) or p = g ( x ) where x > and p > .