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3: Introducing Supply and Demand
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3.1: Demand
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In general, the law of demand states that the quantity demanded and the price of a good or service is inversely related, other things remaining constant.
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3.2: Supply
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The law of supply states that there is a positive relationship between the quantity that suppliers are willing to sell and the price level.
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3.3: Market Equilibrium
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When a market achieves perfect equilibrium there is no excess supply or demand, which theoretically results in a market clearing.
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3.4: Government Intervention and Disequilibrium
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Governments intervene in markets when they inefficiently allocate resources.