1 Initially we have an equilibrium price and quantity at the intersection of the demand and supply curve. Now consumers' income increases. How will this change the price and the quantity of the product produced?

2Briefly compare the main features of a Market Economy with a Command Economy.

3

Distinguish between the short run and long run costs of production.

4 Give an example of an industry which experiences constant returns to scale and an industry experiencing increasing returns to scale.

5 Explain why a Supply curve has different elasticities in the short run and in the long run