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Topic: History
Number of pages / Number of words: 15 / 4096
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The following week, the price has risen to $2.99 per six-pack. This is just too expensive --- you don't buy any. The result is familiar to anyone who shops for anything regularly. We can generalize it with the following statement: as the price of the product rises (falls), the quantity demanded of that product falls (rises)...


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The statement is typically referred to as the law of demand. While one can perhaps think of an exception (if the price of a life saving drug that has no substitute rises, what would happen to your quantity demanded?), they are so few that we can assume safely that the statement is true in all cases.

The following demand schedule for new homes illustrates the law of demand:

Price Quantity Demanded Per Month

$340,000 0

1 $320,000 1000

2 $300,000 2000

3 $280,000 3000

4 $260,000 4000

5 $240,000 5000

6 $220,000 6000

7 $200,000 7000

8 $180,000 8000

9 $160,000 9000

10 $140,000 10000

11 $120,000 11000

Note that, in this example, at any price above $320,000, no one will buy any homes...


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