Q.Explain the demand function and its important determinants.

Quantity demanded depends on several factors acting together, not on price alone.

The demand function expresses the quantity demanded of a commodity $x$ as depending jointly on several variables:

1. Price of the commodity itself ($P_x$) — the primary determinant; by the Law of Demand, quantity demanded normally moves inversely with $P_x$.
2. Price of related goods ($P_r$) — a rise in the price of a substitute raises demand for $x$; a rise in the price of a complement lowers demand for $x$.
3. Consumer's income ($Y$) — demand for a normal good rises with income; demand for an inferior good falls as income rises.
4. Tastes and preferences ($T$) — a favourable shift in taste raises demand, independent of price or income.
5. Expectations ($E$) — if a price rise is expected, current demand may rise as buyers purchase ahead of it.
6. Number of buyers ($N$) — a larger number of buyers in the market raises total (market) demand.

When the demand schedule or demand curve is drawn to study the effect of $P_x$ alone, every other determinant in this list is held constant (ceteris paribus).

Listing only 'price' as a determinant and forgetting that the demand SCHEDULE/CURVE study price's effect only after holding every other determinant constant — a shift in any OTHER determinant moves the whole curve, it does not just move a point along it.