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Law of Demand , Supply and Market Equilibrium (Shifts in Demand Curve…
Law of Demand , Supply and Market Equilibrium
Shifts in Demand Curve
Consumer income
Income increase, the demand for normal good will increase
Income increase, the demand for an inferior good will decrease
Prices of related goods
price of one good falls, reduces the demand of another good = substitutes
price of one good fall, increase the demand for another good = complements
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Demand
Law of demand
the quantity demanded of a good falls, when the price of the good rises
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Law of demand and supply
price of any good adjust to bring the quantity supplied and the quantity demanded for the good into balance
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Surplus and Shortage
Surplus
When price > equilibrium, then quantity supplied > quantity demanded
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Shortage
When price < equilibrium price, then quantity demanded > the quantity supplied
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