Part 1:

1. Define supply as an economist would.

2. List and explain three (3) non-price factors that will shift the supply curve.

3. If the cost of production of fountain pens falls how will the market for fountain pens be impacted? (Hint: start by drawing the appropriate supply and demand curves)

Part 2:

1. Define utility as an economist would.

2. State and explain the Law of Diminishing Marginal Utility.

3. How is the Law of Diminishing Marginal Utility reflected in the demand curve?

Part 3:

1. Assume that a product has an elastic demand. Explain what will occur to the firm's total revenue if the price of the product is increased.

2. List and explain three (3) factors that could impact price elasticity of demand for a product.

3. What is income elasticity? How is it used by economists?

4. What is cross elasticity of demand? How is it used by economists?