1. Explain the difference between scarcity and a shortage

2. Explain the difference between a surplus and consumers surplus

3. If Bill earns $10/hour, what is the most economic way for him to travel from DC to Little Rock? Explain.
Walk: $1 and 750 hours
Bus: $79 and 30 hours
Train: $180 and 20 hours
plane: $400 and 4 hours
private jet: $3000 and 2 hours

4. Distinguish an increase in demand from an increase in quantity demanded, using 2 graphs. Explain the different factors that could cause these increases.

5. Graph the effect of an increase in the price of cameras on the market for film. Explain.

6. How well do each of the following markets meet the assumptions of a competitive market? Explain.
a. The US stock market
b. wheat
c. electricity
d. US autoworkers
e. aircraft

7. If the equilibrium price for gasoline is $2, what would happen if the maximum legal price was set at $1?

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