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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4

Suppose, for example, that we want to concentrate on the relationship between the quantity demanded of the good and its own-price, Px. Then we would hold constant the values of income and the price of good Y. In our example, those values are 50 and 20, respectively. So, by inserting the respective values, we would rewrite Equation 2 as

Equation (3) 

Qdx=8.4−0.4Px+0.06(50)−0.01(20)=11.2−0.4Px

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3.1. The Demand Function and the Demand Curve
n phrase ceteris paribus (literally, “all other things being equal” in the sense of “unchanged”). In this reading, we will use the phrase “holding all other things constant” as a readily understood equivalent for ceteris paribus. <span>Suppose, for example, that we want to concentrate on the relationship between the quantity demanded of the good and its own-price, P x . Then we would hold constant the values of income and the price of good Y. In our example, those values are 50 and 20, respectively. So, by inserting the respective values, we would rewrite Equation 2 as Equation (3)  Qdx=8.4−0.4Px+0.06(50)−0.01(20)=11.2−0.4Px Notice that income and the price of automobiles are not ignored; they are simply held constant, and they are “collected” in the new constant term, 11.2. Notice also that we


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