Inverse demand function: Difference between revisions

Revision as of 17:20, 4 January 2009

Revision as of 20:41, 14 January 2009

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In mathematical terms, if the [[demand curve|demand function]] is f(x), then the inverse demand function is f^-1(x). 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 ([[Price|P]]) on the vertical axis and Quantity ([[Quantity|Q]]) on the horizontal axis.

To compute the inverse demand equationfunction simply switchsolve thefor [[Quantity|Q]] and [[Price|P]] variables in the [[demand curve|demand function]]. andFor solveexample, forif the demand function has the form Q = 10 - 2P then the inverse demand function would be P = 5 - Q/2.

==See also==