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Unformatted text preview: 1 st law of Demand: As P increases, qD decreases Income If income increases and a. Demand increases, the good is normal b. Demand decreases, the good is inferior Price of other goods If the price of good Y increases, and as a result the demand for good X increases the goods are substitutes (ex. gasoline and natural gas) If the price of good Y increases, and as a result the demand for good X decreases the goods are compliments (ex. gas and SUVs)...
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- Fall '07