2. Why do economists use the ceteris paribusassumption?

3. In an analysis of the market for paint, an economist discovers the facts listed below. State whether each of

these changes will affect supply or demand, and in what direction.

a. There have recently been some important cost-saving inventions in the technology for making paint.

b. Paint is lasting longer, so that property owners need not repaint as often.

c. Because of severe hailstorms, many people need to repaint now.

d. The hailstorms damaged several factories that make paint, forcing them to close down for several

months.

4. Many changes are affecting the market for oil. Predict how each of the following events will affect the

equilibrium price and quantity in the market for oil. In each case, state how the event will affect the supply

and demand diagram. Create a sketch of the diagram if necessary.

a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon.
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