Thoroughly discuss and copiously illustrate each of the following:
a) The difference between demand and quantity demanded.
b) Why does the typical demand curve have a negative slope?
c) The difference between supply and quantity supplied.
d) Why does the typical supply curve have a positive slope?
e) Given that there is a substantial difference between movement along a curve and a shift in a curve.
i) Elaborate on the conditions and/or circumstances that shift demand curves. ii) Elaborate on the conditions and/or circumstances that shift supply curves. f) Regarding a normal good, demonstrate how and why the substitution and income effects dictate the inverse relationship between price and quantity demanded. i) Why do the income effect and substitution effect work move in opposite directions for inferior goods? ii) How can the relative magnitudes of the income effect and substitution effect result in upward sloping demand curves for Giffen goods? g) Statement: Since the supply curve of labor and the supply curve of savings both have steep positive slopes; we often assume they are vertical. Using the concepts of substitution effect and income effect, reconcile the above statement. h) Reconcile the following statement: The competitive firm’s marginal cost curve is its supply curve.
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