Demand Function. It explains the relationship between the demand for a commodity and the factors determining demand. In a way it gives functional relationship (i.e., cause and effect relationship) between demand and its determinants. The above analysis is presented as demand function in the form of the following equation.

D_x = f(P_x, P_R, Y, T)

The equation shows that demand for commodity x (D_x) is the function (f) of Price of commodity x (P_x); Price of Related goods (P_R); Income of consumer (Y) and Tastes of consumer (T).

A consumer's demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain unchanged.

Let us first discuss the relationship between the price and demand which is expressed in the form of 'law of demand' and take up the relationship with other determinants afterwards.