Question 3 [13]

3.1. With prices of a good kept constant, indicate in table format three (3) factors/variables that will cause the demand curve of a certain good to shift to the right (and what will happen to the specific factor/variable), and three (3) factors/variables that will cause the supply curve of the same good to shift to the left (and what will happen to the specific factor/variable). (6)

3.2. Draw a typical graph as an illustration to indicate the market demand and supply curves of B, a fictitious good or service. Clearly indicate on the graph the equilibrium price and quantity. Then also indicate on the graph where, firstly, a surplus of the underlying good or service B will be found (indicate what will happen to the price) and, secondly, where a shortage of the underlying good or service will be found (indicate what will happen to the price). (5)

3.3. Explain what you understand the law of demand and the law of supply to be. (2)