The
amount of a good that a customer is willing to buy and able to purchase over a
period of time, at a certain price is known as the quantity demanded of that
good. The quantity desired to be purchased may be different from the quantity
of good actually bought by the consumer. As quantity demanded is a flow
concept, the relevant time dimension has to be mentioned which will indicate
the quantity demanded per unit of time. Demand is a relationship between the
price and the quantity demanded, other things remaining constant. Hence the
other things imply, the factors which influence the decision of the consumer to
buy.
If
X1 denotes the quantity demanded and P1 its price per
unit of the good, then other things remaining constant the demand function will
be given as
X1 = f(P1)
The
function shows that quantity demanded depends on the price. This means that any
change in price will result in a corresponding change in the quantity demanded.
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