Reference no: EM133217707

Discuss how price for a given item is determined in the market place. Our interest is the theory that explains why an item costs it does and how how many units of that item an economy produces is determined.

1. Provide examples of a variable that affect the supply curve and a variable that affects the demand curve (You must refer to the determinants of demand and supply in your textbook)

2. Think of a product or service that use in your everyday life or workplace. Describe how the supply or demand of this product might be changed. Which of the main categories of demand and supply factors presented in your textbook are involved?

3. Discuss: What does equilibrium price represent? What factors cause equilibrium to change and why is it important that prices are flexible in our economy? After reading about price ceiling and price floor, do you think the government should control the level of prices for products that are really important such as gasoline (read about price ceiling and price floor in your textbook before answering this item)