Explain and give examples:

Free goods

Economic goods

Public goods

2.   What variables influence the demand for a normal good? Explain why a reduction n the price of a normal good does not increase the demand for that good.

• Popeye’s income declines and as a result, he buys more spinach. Is spinach an inferior or normal good? Illustrate what happens to Popeye’s demand curve for spinach.
• Using supply and demand curves, show the effect of each of the following events on the market for cigarettes.

1. A cure for lung career cancer is found.
2. The price of cigarette increases.
3. Wage increase substantially in states that grow tobacco.
4. A fertilizer that increase the yield per acre of tobacco is discovered.
5. More state pass laws restricting smoking in public places