a demand function is affected by seven variables: Price (p),
income (I), price of substitute goods (ps), price of complementary
goods (pc), price expectations E(p), income expectations E(I), and
personal tastes and preferences (T).
Q d = f ( p , I , p s , p c , E ( p ) , E ( I ) , T )
Please show (in a diagram) and explain how an increase in these
variables will change the equilibrium price and quantity level in
the market. You also have to give at least one sentence explanation
of the result and logic behind it.
Hint: You draw a graph and then show if the demand function shifts
upward or downward. Then find the new equilibrium point and
indicate the direction of price/quantity level. So, you have to
draw 7 different diagrams. You may hand write or scan it.
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a demand function is affected by seven variables: Price (p), income (I), price of substitute goods...
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