1. True or false: if it costs more to produce good A than good B, then good A will definitely be more expensive than good B. Explain.

1. True or false: if there is more demand for good A than good B, then good A will definitely be more expensive than good B. Explain.

1. The best prediction we can make about the price of a good in a specific market (as well as how many units will be traded) is the equilibrium market price. Why do we call the intersection of demand and supply an "equilibrium"?

1. What happens when quantity demanded is greater than the quantity supplied? Explain.

1. What happens when quantity supplied is greater than the quantity demanded? Explain.

1. Does the equilibrium point maximize the number of possible voluntary exchanges? Explain.

1. Why are markets usually considered superior to other mechanisms for allocating scarce resources?

1. When a city is hit by a natural disaster, many government officials choose to implement price-gouging laws, prohibiting firms from raising the prices of goods and services. Use the supply and demand model to describe what happens when a natural disaster occurs, and what the final outcome is with and without the implementation of price-gouging laws.

1. In many cities, parking is a very serious problem. In Boston, for example, it is not uncommon for a driver to spend half an hour looking for a parking space. This shortage of parking spaces seems to be highly inefficient. Assume that it is not possible to build new parking lots. What is a possible solution to the problem?

1. What will happen to the equilibrium price and quantity of fish if fish oils are found to help prevent heart disease?

1. What will happen to the equilibrium price and quantity of potatoes if population increases and a new, higher-yielding variety of potato plant is developed?

1. What will happen to the equilibrium price and quantity of apples if apples are discovered to help prevent colds and a fungus kills 10% of existing apple trees?

1. How would each of the following affect the US market supply curve for corn?

1. A new and improved crop rotation technique is discovered.
2. The price of fertilizer falls.
3. A tornado sweeps through Iowa.
4. How will an increase in the birth rate affect the equilibrium price of land?

1. What are the consequences of rent control?

1. What are the consequences of minimum-wage laws?

1. Suppose a disease kills millions of turkeys before Thanksgiving. Explain why we should not expect a shortage of turkeys during Thanksgiving. Hint: as we saw in class, a shortage is defined as excess demand, a situation in which the quantity demanded is greater than the quantity supplied.

1. According to the supply and demand model, what is the likelihood that the world will eventually run out of oil? Justify your answer.