Explain the major difference between the law of demand and the law of supply. Consider the supply and demand schedules below, draw the demand and supply curves on the diagram (Do not submit the curve but use it to help you answer the questions below)
|
Price
|
Qty. Demanded
|
Qty. Supplied
|
|
$ 10
|
0
|
10
|
|
9
|
1
|
9
|
|
8
|
2
|
8
|
|
7
|
3
|
7
|
|
6
|
4
|
6
|
|
5
|
5
|
5
|
|
4
|
6
|
4
|
|
3
|
7
|
3
|
|
2
|
8
|
2
|
|
1
|
9
|
1
|
a. In a free market, what will the equilibrium price be?
b. What will the equilibrium quantity demanded and quantity supplied be?
c. If price were $2, what would happen? (Discuss in terms of adjustment to equilibrium.)
d. If price were $7, what would happen? (Discuss in terms of adjustment to equilibrium.)
e. If price were $5, what would happen? (Discuss in terms of adjustment to equilibrium.)
f. Name 4 factors that can cause the demand curve to shift.
g. Name 4 factors that can cause the supply curve to shift.