1) Answer and explain the following.

a)What gives a person a comparative advantage?

b)Distinguish between comparative advantage and absolute advantage.

c)Why do people specialize and trade?

d)What are the gains from specialization and trade?

e)What is the source of the gains from trade?

2)

f)What is the distinction between a money price and a relative price?

g)Explain why a relative price is an opportunity cost.

3)a) Define the quantity demanded of a good or service.

b) What is the law of demand and how do we illustrate it?

c) What does the demand curve tell us about the price that consumers are willing to pay?

d) List all the influences on buying plans that change demand, and for each influence, say whether it increases or decreases demand.

e) Why does demand not change when the price of a good changes with no change in the other influences on buying plans?

4)a) Define the quantity supplied of a good or service.

b) What is the law of supply and how do we illustrate it?

c) What does the supply curve tell us about the producer's minimum supply price?

d) What happens to the quantity of cellphones supplied and the supply of cellphones if the price of a cellphone falls?

5)

a)What is the equilibrium price of a good or service?

b)Over what range of prices does a shortage arise? What happens to the price when there is a shortage?

c)Over what range of prices does a surplus arise? What happens to the price when there is a surplus?

d) Why is the price at which the quantity demanded equals the quantity supplied the equilibrium price?

e) Why is the equilibrium price the best deal available for both buyers and sellers?