1)Identify and describe the role of supply and demand and equilibrium in a market economy in terms of efficiency advantages as applied to the problem of scarcity and(course objective 3)Discuss how markets function and what happens in the presence of market failures.

Specifically, will be able to:

• Draw a supply and demand market diagram and explain equilibrium
• Explain why markets will not experience surpluses or shortages
• Explain why changes in costs shift the supply line in a supply and demand market diagram

1A.Using lecture 1 section 3.1 A and 3.1B,

explain why the law of demand holds (there are 4 reasons) and why the law of supply holds (there are 3 reasons).

2A.Using lecture 2 section 3.1 B,

draw a market diagram for oranges, completely labeled that shows a surplus. Explain why a surplus won't happen in a free market.

3A.Using lecture 2 section 3.1 B,

draw a market diagram for oranges, completely labeled that shows a shortage. Explain why a shortage won't happen in a free market.

4A.Using lecture 2 section 3.2A and 3.2B

Please list thefactors that affect demand and that affect supply (this can be a copied list from the lecture)

B. Read the textbook and take notes (Of course you can take more notes than on just these topics. These are here to get you focused on what I think is MOST important.)

5B.Using section 3.1 section titled "Equilibrium - where demand and supply intersect" in your textbook.

Draw a supply and demand diagram for oranges and identify the equilibrium price and output.

6B.Using Section 3.2 "How production costs affect supply" and "work it out - shift in supply",

explain why an increase in costs shifts the supply to the left (or upwards).