The demand function is a curve, each point of which varies depending on the value of demand for individual groups of goods, as well as on a number of factors influencing it. There is another interpretation of this economic concept. In accordance with it, the demand function is the interdependence that exists between the price of a product and consumer demand for it. However, other factors are considered constant.
When constructing models of the dependence of demand on consumption, which find their application using mathematical methods of statistics, the data obtained by processing information on the price factor, as well as on the level of the income part of the population, are used. Also taken into account:
- data on the consumer’s availability and terms of use of items related to durable goods;
- composition of families;
- the scale of housing construction, which serves as the basis for the existence of the need to purchase furniture, etc.
Most often, a one-factor demand function is used in economic theory . It reflects the dependence of household needs on the level of income they receive. The graphs constructed according to these data bear the name of E. Engel's curves - in honor of the German scientist who was the first to study their properties.
The demand function in its most general form is expressed by the direct dependence of the volume of demand or consumption of various goods on the average income of the population. The nature of these curves may vary in accordance with available indicators. So, subject to the proportionality of the growth of demand and income, a linear demand function arises. The horizontal abscissa axis of the constructed graph reflects the magnitude of the change in household cash. The ordinate (vertical) serves as a line on which we can see the volumes of demand. The line obtained as a result of using existing indicators will be almost straight. An example of such a function is the dependence of the costs and incomes of workers and employees on berries and fruits, ready-made clothes and knitwear, as well as seafood.
There is also a relationship that characterizes faster growth in demand for a particular product group with a general increase in household income. The graph of such a function has the form of a convex curve.
Economic theory also considers the lag of needs from the growth in the amount of cash that occurs at a certain saturation of demand. The graph of such a dependence has the shape of a concave curve.
The mechanism of a market economy is based on the demand and supply function . The growing needs of the population are a prerequisite for the manufacturer to increase or start the production of certain goods. Demand generates the supply of products necessary for a household, their assortment list and quality. The function of the proposal is the ability to connect the consumer and the manufacturer, and the purchase of finished products with their sale. In connection with an increase in demand, there is an increase in the output of goods. At the same time, the quality of the manufactured product is constantly improving and the cost of its manufacture is reduced. This leads to an increase in the number of offers.
To achieve equilibrium in the consumer market, a necessary condition is the study of demand. It is divided into several categories:
- implemented (satisfied);
- unsatisfied;
- emerging.
Demand is realized when there is a constant sale of any group of goods that is available in the distribution network. Unmet needs arise when the population has the money to buy a particular product with insufficient quantity.