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Line 3: ==Definition== In mathematical terms, if the [[demand curve\|demand function]] is f(Q), then the inverse demand function is f<sup> -1−1</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. The inverse demand function is the same as the average revenue function, since P = AR.<ref>Chiang & Wainwright, Fundamental Methods of Mathematical Economics 4th ed. Page 172. McGraw-Hill 2005</ref>

Inverse demand function: Difference between revisions