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Law of demand

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==Causation versus correlation: superfical counterexamples==
It is important to understand that the law of demand discusses the effect of a change in price on the quantity demanded for the good. Thus, it does not predict that an increase in price is always accompanied by a decrease in quantity demanded. Rather, it says that, [[ceteris paribus]], an increase in price is responsible for a decrease in quantity demanded.
===Independent shifts of the demand curve===
The analysis of the relation between quantity demanded and price is carried out in terms of ''real'' prices, i.e., prices ''relative'' to the prices of similar goods and the household income. An across-the-board inflation, that affects all prices uniformly, and also affects income (though wage rises) and savings (through interest) in the same proportion, should not in principle lead to a decrease in quantity demanded.
However, non-uniform inflation can lead to an ''increase'' in quantity demanded even with an increase in price, if the inflation is responsible for a ''greater'' increase in the price of substitutes. Similarly, an increase in the price of factors of production used for a certain good may lead to an increase a decrease in its pricethe quantity of those factors of production demanded (i.e., a reconfiguration of the production process to use less of those factors of production), but if it leads to a ''greater'' increase in the price of substitutes for those factors of production, there may be either an increase or a decrease in demandthe quantity demanded. What happens depends on the interplay between the [[income effect]] and the [[substitution effect]].
For instance, an increase in fuel prices may lead to an increase in train fares but a greater increase in the cost of car fuel. Thus, people may start traveling ''more'' by train even though train fares have increased.
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