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Law of demand

9 bytes added, 17:03, 18 February 2012
Independent shifts of the demand curve
[[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 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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