1. Describe how the law of supply and demand works. Use at least one example in your answer. {4 points) 2. Define optimal efficiency. How is optimal efficiency achieved in production? {4 points) 3. Give one example of a fungible good and one example of a non-fungible good. What is the difference between these two types of goods, and why is it important? 4. Define bargaining power. Explain the differences in bargaining power that employers have with union workers versus non-union workers. (5 points) 5. Explain why the housing market follows an up-and-down cycle. {4 points) 6. Why does relative scarcity determine the level of prices in a free-market system