A statistical interpretation of a market demand curve for a commodity obeying the law of demand

Somdeb Lahiri ()
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Somdeb Lahiri: PDEU, India

Managerial Economics, 2023, vol. 24, issue 1, 27-38

Abstract: In this note we provide a statistical interpretation of the Marshallian market demand curve of a commodity that obeys the law of demand and which has a finite and positive level of satiation. A consequence of our approach is that in the context of two goods, we are able to obtain demand functions which are very similar to those obtained by “budget-constrained Cobb–Douglas utility maximization†, but now as a result of a “budget-constrained linear utility maximization†exercise, although our budget constraint is “slightly different†from the one that would be used for the former optimization problem.

Keywords: market demand curve; statistical interpretation; reservation price; willingness to pay; consumers surplus (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:agh:journl:v:24:y:2023:i:1:p:27-38

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