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Unformatted text preview: now assume that demand responds not only to the price of the good but also to the change in the price of the good. In other words, we assume that if the price of the good is changing, then this shifts the demand curve. We shall leave open the question at this stage of whether the demand curve shifts to the right or the left as a result of the price change. The model now takes the form q d = a + bp + f dp dt b < , f = q s = c + dp d > dp dt = ( q d q s ) > (2.7)...
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- Fall '11