Economics notes for midterm

Economics notes for midterm - Y-axis= Price X-axis=...

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Y-axis= Price X-axis= Quantity A change in price of a good causes a movement along the demand curve. A change in any variable that affects demand—except for the good’s price—causes the demand curve to shift. An increase in income will INCREASE demand (shift curve rightward) for a normal good, and DECREASE demand for an inferior good. A rise in the price of a substitute INCREASES the demand for a good (shift curve rightward) A rise in the price of a compliment DECREASES the demand for a good (shift curve leftward) The law of supply states that when the price of a good rises, and everything else remains the same, the quantity of the good supplied will rise Each point on a supply curve shows the quantity that sellers would choose to sell at a specific price Everything but good’s price causes a shift in supply curve When the price of an alternative rises, the supply curve shifts leftward An INCREASE in sellers—with no other change—shifts the supply curve rightward
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