1.Describe the market of the product or service.

Make sure to include a discussion about the number of firms and type of products and make a deduction on the market structure: monopoly, oligopoly, monopolistic competition, perfect competition.

2.Describe the price elasticity of demand.

Factors that could affect the price elasticity of demand are the availability of close substitutes, whether the good or service is a necessity or luxury, the definition of the market, the time horizon, etc.

3.Describe the price elasticity of supply.

Factors that could affect the price elasticity of supply are the time horizon (length of production period), number of producers, spare capacity, ease of switching, ease of storage, etc.

4.Draw the supply-and-demand graph(s) before the change.

Be sure to label your graphs and clearly indicate the initial consumer surplus, producer surplus, and government revenue (if any).