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Comparative statics for demand and supply

No change in size, 07:22, 23 January 2016
Changes in the demand curve
* Income (the [[income effect]]): An increase in income ''typically'' causes the demand curve to move outward (i.e., more demand at the same price). The exception is for [[inferior good]]s.
* Prices of substitutes (the [[substitution effect]]): An increase in the price of substitutes causes the demand curve to move inwardoutward, while a decrease in the price of substitutes causes the demand curve to move outwardinward.* Prices of complementary goods: An increase in the price of complements typically causes the demand curve to move outwardinward, and a decrease in the price of complements causes the demand curve to move inwardoutward.
* Expectation of future prices: For goods where it is possible to choose when to consume it (hence either hasten or delay gratification), the expectation of lower prices in the future causes an inward shift of the demand curve, and the expectation of high prices in the future causes an outward shift of the demand curve. In contrast, if current consumption is complementary to future consumption, the opposite effect may be encountered.
* Preferences.
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