Briefly explain the advantages and disadvantages of free markets and free trade. - correct answer
Consumers & Producers get what they are worth, income increases and resources are paid for what they
are worth.
Change is required resulting in unequal wealth distribution, some winners & losers.
Briefly define and explain the term "demand function" - correct answer relationship
between price & quantity demanded, ceteris paribus
Briefly explain what the term "demand" represents - correct answer consumer
willingness & ability to pay for a good
Briefly explain how the demand function was derived - correct answer sum of all
individual demand curves
Briefly define and explain the term "supply function" - correct answer relationship
between price & quantity supplied, ceteris paribus
Briefly explain what the term "supply" represents - correct answer the cost of
production
Briefly explain how the supply function was derived - correct answer sum of all
individual firms MC curves
Why are these functions called "inverse" - correct answer the independent variable
is on the y axis (price) P=f(Qd), P=f(Qs)
Consumer Surplus - correct answer amount willing to pay - price actually paid