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Law of demand

132 bytes added, 15:18, 11 September 2010
Independent shifts of the demand curve
===Independent shifts of the demand curve===
[[File:Demandexpansionandmarketprice.png|thumb|250px300px|right|An expansion of the demand curve leads to an increase in the market price and an increase in equilibrium quantity demanded/supplied]]
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 demand increases for every given price, this causes a tendency for the [[market price]] (the price at which the market clears) to rise. Similarly, if the shift is inward (also called a ''contraction'' of the demand curve), there is a tendency for the market price to fall.
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