MODELING THE LAW OF DEMAND IN BUSINESS SIMULATORS

A theoretical proof for the mathematical properties of the law of dema nd is presented. The properties differ significantly from the properti es of demand functions commonly used in computerized business simulato rs. Using a probability distribution that has the mathematical propert ies required by the law of demand, a market demand model is presented. The new model satisfies economic and marketing theories of consumer b ehavior and offers considerably more simulation flexibility than possi ble with business simulators currently available. Suggestions for usin g the new model to simulate real industries are provided.