1. Explain the effect on demand caused by the following:
a. the expectation of future price increases,
b. a change in the price of the good
c. an increase in the price of a substitute good and
d. an increase in the price of a complementary good.
2. Why do supply curves slope upward? Explain? What is the difference between a change in supply and a change in demand?
3. Explain the concept of the market equilibrium. What happens when price is set above the equilibrium? What happens if the price is set below the equilibrium? Explain.
4. List and explain three factors that cause the demand curve to shift? What will happen to the equilibrium price when we have an increase in demand?
5. List and explain three factors that cause the supply curve to shift?
6. What does elasticity mean? If the demand for a product is inelastic, what are the implications.