1) Explain what is meant by price floors and price ceilings. What are the consequences of a) a price floor that is higher than the market equilibrium price; b) a price ceiling that is lower than the market equilibrium price. Demonstrate your answers graphically.
2) Discuss the positive aspects of the division of labor. Then evaluate the division of labor in terms of what might be some of its disadvantages.
3) What is the meaning of the term "consumer sovereignty?" Demonstrate graphically how the perfectly competitive market system effectuates consumer sovereignty as consumers buy more peanuts and fewer pretzels.