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Unformatted text preview: Relative price of High quality= (4/3) 4. P H is just 1.33 low quality rather than 2 vii. Relative price in Florida is only $2, no shipping b. A fixed charge to a high and low quality good lowers the relative price of the high quality good 3. Shifting the Demand Curve a. If the price of good X goes up i. If good Y is a substitution, demand curve for good X will move up ii. If good Y is a compliment, demand curve for good X will go down iii. If income (M) goes up, and good X is normal, then the demand curve for X will go up iv. If M goes up, and good X is inferior, then the demand curve for X will go down v. Note: this is a shift in the demand curve, not a change in quantity demanded vi. An increase in Demand relates to a shift in the demand curve...
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This note was uploaded on 04/07/2008 for the course ECO 2302 taught by Professor Smith during the Spring '08 term at University of Texas at Dallas, Richardson.
- Spring '08