ELI5: Explain Like I'm 5

Inverse demand function

An inverse demand function is like a recipe for a price. It tells you what to add and mix together to get a specific cost. To use this ‘recipe’, you need to start with two ingredients: how much people are willing to buy and how much they cost. The inverse demand function takes these two ingredients and mixes them together to create the price of a product or service. By looking at the inverse demand function, you can see how much people are willing to pay for a product or service depending on how much is available.