1. Explain what a perfectly competitive market means in economic terms. (5 pts) (SLO's #1 & 3)
2. Assuming this graph plots supply and demand for a specific product, identify line L1 and line L3. (10 pts - SLO # 1)
3. Lines L1 and L3 intersect at point 'a' (ignore point 'b' for now).
4. What term is used to describe point 'a'. (5 pts) (SLO #1)
5. Explain in detail what this term means.(5 pts) (SLO #1 & 3)
6. In analyzing this graph for L1 and L3, explain what would occur if a supplier attempted to sell this product for $20. (5 pts) (SLO's 1, 2, 3)
7. Assume that line L1 shifts outward and to the right to line L2.
8. Identify and explain two different occurrences which would cause this shift. (5 pts) (SLO's 1 & 3)
9. This shift from L1 to L2 shows L2 intersecting L3 at a new point: point 'b'. Explain what has occurred in terms of quantity supplied and the new price, i.e. why have both quantity and price changed as illustrated at point 'b'? (10 pts) (SLO's 1,2,3)
10. If this graph represented supply and demand analysis for a product you were selling, explain how you would use this model to predict consumer behavior (you may use varying quantity/price relationships to support your explanation). (25 pts) (SLO's 2 & 3)