1.Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. Why?

2. Explain the impact of:

a.

A price floor for milk set above the equilibrium price.

b.

A price ceiling for milk set below the equilibrium price.

3. List and explain three non-price determinants of demand. Explain how a change in each of them can affect demand.

4.If nothing else changes, explain what happens to the price and quantity if the demand curve shifts to the right?

5.Suppose a decrease in consumers' income causes a decrease in the demand for sausage and an increase in the demand for cheese. Which good is an inferior good and which is normal? Explain your answer.