1. When price falls the demand increases and when price rises demand falls. DR represents a
increase in demand which then increases the price, DL shows a decrease in demand making the
price drop. DO is the line of equilibrium where the price.
2.
A price !oor can be set below free market equilibrium price; a price !oor must be greater than
the equilibrium price in order to be e#ec$ve. Price ceiling limits how high a price is charged for a
product. When a price ceiling is set, a shortage occurs, there is more demand that there is at the
equilibrium, opposite of the price !oor.
3. GDP – value of the total worth of a countries produc$on and services within its boundary.
GNP – es$mated value of total worth of produc$on and services on foreign land
4. Disposable Income – how much money someone has to spend on all of life’s necessi$es, or to
