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Law of demand

2 bytes added, 16:45, 7 June 2013
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[[File:Demandexpansionandmarketprice.png|thumb|300px|right|An expansion of the demand curve leads to an increase in the market price and an increase in equilibrium quantity demanded/supplied, but this simultaneous increase of price and quantity demanded does not violate the law of demand.]]
To understand how the causation and correlation issue can be confused, consider a shift in the demand curve due to a change in one of the other [[determinants of demand]] (i.e., an [[exogenous parameter]] in the interaction between demand and price). If the shift is outward (also called an ''expansion'' of the demand curve), i.e., if quantity demand demanded increases for every given price, this causes a tendency for the [[market price]] (the price at which the market clears) to rise (assuming that the [[law of supply]] holds, i.e., the supply curve is upward sloping).
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