Instructions: Answer the questions Include also how you have calculated to get to the result. You may get points even if the final result is not correct. A correct result without explaining how you got to the result is not enough to get full scores.

1. A) For a competitive market graph a supply-demand curve showing how price is dependent of the quantity, mark equilibrium price as p* and quantity as q* in the graph.

B) Illustrate an increase in demand in the graph and a new equilibrium price P** and Q**

C) Illustrate and explain what will happen to the supply curve and the market price in the long run.

2. Suppose my indifference curves are illustrated as below. What will be my choice between shelter and food if my income is 14 and the price for shelter is 1 and food 2?

\fQY IIL Q x