A. Thoroughly and completely explain the Law of Supply i. Define supply and state the law of supply. ii. List and explain the determinants of supply and how each can either cause an increase in supply or a decrease in supply. 1. There are 6 determinants of supply listed in the slide set. You should be able to list and explain how each shifts the supply curve to the left or right. iii. Thoroughly and completely explain the differences between a change in supply and a change in quantity supplied. 1. You should be able to explain each of these cases.
B. Thoroughly and completely explain the following graph of market equilibrium. i. Explain what market clearing equilibrium means. 1. Explain what this really means. Please be thorough. ii. Discuss what happens at a price above and below the equilibrium price, and why those things happen. 1. What if the price were above the equilibrium price – Explain what happens. 2. What if the price were below the equilibrium price – Explain what happens.