SECTION 1

a) Why does the demand curve slope downward?

b) Why does the supply curve slope upward?

c) Make a distinction between a ``movement along the demand curve and a `shift in the demand curve``

d) Describe the market equilibrium

e) Describe the effect of an increase in demand on the equilibrium price

f) Describe the effect of an increase in the factor cost of a product (e.g. labor, material) on equilibrium price and quantity, that is how will price and quantity change

SECTION 2

a) Make adistinction between price ceilings and Price floors.(Give examples of each of the price controls.

b) Define the Price elasticity of demand. If a firm`s demand curve is less elastic(less than 1), should it raise or lower the price in order to improve its total revenue? c) Make a distinction between normal goods and inferior goods. Provide examples. Which elasticity measure (price, income, or cross elasticity) classifies goods as inferior and normal goods?

d)Why do different consumers (corporate versus residential) pay different prices for the use of electricity (power)? e) What is a deadweight loss?

PLEASE LABLE BY SECTION