2. Why do economists use the ceteris paribus assumption?

3. In an analysis of the market for paint, an economist discovers the facts listed below. State whether each of these changes will affect supply or demand, and in what direction.

a. There have recently been some important cost-saving inventions in the technology for making paint.

b. Paint is lasting longer, so that property owners need not repaint as often.

c. Because of severe hailstorms, many people need to repaint now.

d. The hailstorms damaged several factories that make paint, forcing them to close down for several months

5. Let's think about the market for air travel. From August 2014 to January 2015, the price of jet fuel decreased roughly 47%. Using the four-step analysis, how do you think this fuel price decrease affected the equilibrium price and quantity of air travel?

6. A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the equilibrium price and quantity of flat screen TVs?

7. What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price

8. Does a price ceiling change the equilibrium price?

9. What would be the impact of imposing a price floor below the equilibrium price?

10. Does a price ceiling increase or decrease the number of transactions in a market?

11. If a price floor benefits producers, why does a price floor reduce social surplus?

12. What determines the level of prices in a market?

13. What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?

14. Will demand curves have the same exact shape in all markets?

15. Will supply curves have the same shape in all markets? If not, how will they differ?

16. What is the relationship between quantity demanded and quantity supplied at equilibrium? What is the relationship when there is a surplus?

17. How can you locate the equilibrium point on a demand and supply graph?