Relationship Between price and Quantity Demanded

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    Relationship Between price and Quantity Demanded

    • From prior experience, we know that if the price of something falls, we want it more
    • Similarly, in a supermarket, a price reduction in a product we normally buy will result in an increase in the quantity demanded
    • So as price increases, demand decreases
      • This is an inverse relationship
    • In considering matters of demand and price, we assume consumers are rational, and if products are exactly the same, they will opt for the cheaper on.

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