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==Definition==
Market demand is determined by price, y=f(x)
Price can also be determined by demand, x=f(y), this is the inverse demand function (price reaction and demand)
In mathematical terms, if the [[demand curve|demand function]] is f(P), then the inverse demand function is f<sup>−1</sup>(Q), whose value is the highest price that could be charged and still generate the quantity demanded Q.<ref>Varian, H.R (2006) Intermediate Microeconomics, Seventh Edition, W.W Norton & Company: London</ref> This is to say that the inverse demand function is the [[demand curve|demand function]] with the axes switched. This is useful because economists typically place price ('''P''') on the vertical axis and quantity ('''Q''') on the horizontal axis.
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