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In cost and demand problems, why is the equation for price per unit named the demand function, as shown in the examples below? Also, why is it equal to a constant minus some multiple of the number of units sold? The cost function's formula makes sense; the two terms represent fixed costs and the variable costs of each unit sold, but I seem don't seem to understand what the demand function is saying.

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  • $\begingroup$ If it confuses you then simply rearrange to equation so that it states total units in terms of a constant minus some price. Typically, one can just solve for equilibrium price and then determine the equilibrium production. Just do whatever makes most sense to you. $\endgroup$ – 123 Jul 9 '18 at 13:58
  • $\begingroup$ In addition to @123 s answer economists are sometimes a bit sloppy with their terminology. What you're really looking at is an inverse demand function. In graphical analysis this is also typically what is drawn (for historic reasons) and called a demand curve. $\endgroup$ – Maarten Punt Jul 9 '18 at 17:21

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