A demand equation is an algebraic representation of product price and quantity. Because demand can be represented graphically as a straight line with price on the y-axis and quantity on the x-axis, a demand equation can be as basic as a linear equation. They can also be much more complex, however, and can require significant algebraic manipulation.
Linear equations can be derived as long as two points on the graph are known. These are used to determine the slope, and then, there are several methods by which someone can determine the y intercept and complete the equation once the slope is found. Once the general linear equation has been completed, it can be used to predict demand based on either the cost or quantity variables.