1. Explain the factors of production and give an example for each one.
2. What is the difference between a normal good and an inferior good? How does this relate to the demand curve?
3. What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why do those consequences occur?
4. Briefly explain the three tax systems - proportional, progressive and regressive. As you explain each one, also compare the relationship between marginal tax rate and average tax rate as income rises for each one.