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finlep [7]
3 years ago
12

The law of demand results from which two patterns of behavior?

Social Studies
2 answers:
ludmilkaskok [199]3 years ago
6 0

The correct answer is the following: "substitution effect and income effect".

The demand function represents the quantity of a certain good or service that consumers are willing to purchase in the market at different price levels. The law of demand states that there is an inverse relationship between price and quantity demanded (ceteris paribus, hence, given that the rest remains equal). <u>Therefore, when the price charged increases, the amount that consumers are willing to offer decreases.</u>

The variation of the quantity, due to the price variation, takes place because of the joint incidence of two effects: the effect of the variation of the relative price if compared to other goods (<u>substitution effect</u>) and the effect on the consumer's income as, if the price of a desired or purchased product has increased, the consumer's available income will decrease (<u>income effect).</u>

Dominik [7]3 years ago
6 0

Answer:

substitution effect and income effect

Explanation:

Simply put, the law of demand states that if all other factors remain constant, if a price of a good is higher, fewer people will demand it. As the price of this good falls, the amount of good that the market will demand will increase. That is, the law of demand indicates that under normal conditions in a market, the quantity demanded is inversely proportional to the price of the good in question. That is, if a product has a low price, it will probably have a great demand.

Accordingly, we can state that the law of demand results from the substitution effect and the income effect.

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When the price of a product increased, the amount of consumers who can afford to buy that product is decreased, As a result, this cause a decrease in overall demand over that product. (The opposite happened when the price of product is decreased)

-  a shift in the demand curve. : Represent a change of total demands of a product that is caused by other factors beside the price of the products.

Price is not the only one that can affect demands.  For example, natural disaster could occurred and make a certain type of product become really scarce. This tend to lead to an increase of demand even if the price of that product remain the same.

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