The Market Forces of Supply and Demand

The Market Forces of Supply and Demand -...

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The Market Forces of Supply and Demand 02:07 Law of demand  – quantity demanded falls as price rises (neg slope) Market demand  – sum of demand of all consumers (horizontally) Increase in quantity demanded vs. Increase in demand:               A                    B Increase in quantity demanded:            Increase in demand: Occurs bc price has changed                 Demand curve itself shifts Movement along demand curve             Change in relationship btwn P and D Increase in demand   shift to the right Decrease in demand (i.e. housing market in recession)   shift to the left Normal Good  – an increase in income leads to an increase in demand i.e. luxuries Inferior Good  – an increase in income leads to a decrease in demand i.e. public transportation (ppl buying cars) Substitutes  – fall in price of one good reduces the demand for another good
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This note was uploaded on 02/28/2012 for the course ECON 200 taught by Professor Vincent during the Fall '08 term at Maryland.

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The Market Forces of Supply and Demand -...

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