2.2. Use a diagram to illustrate what will happen to the equilibrium price and quantity of a product if the demand for the product increases. Also mention three factors that can cause an increase in demand. (10)

What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the supply curve for milk.

How does one analyze a market where both demand and supply shift?

What determines the level of prices in a market?

Review Figure 3.4 again. Suppose the price of gasoline is 1.00. Will the quantity demanded he lower or higher than at the equilibrium price of 1.40 per gallon? Will the quantity supplied be lower or higher? Is them a shortage or a surplus in the market? If so, of how much? Figure 3.4 Demand and Supply of Gasoline

Explain all the reasons why a decrease in a products price would lead to an increase in purchases.