Final answer:
Supply and demand in economics determine prices and quantities in a market. Changes in supply and demand cause prices to change. Economists use market models to predict price changes based on various factors.
Step-by-step explanation:
Supply and demand are two fundamental concepts in economics that determine the prices and quantities of goods and services in a market.
Statement 1: Changes in supply and demand cause prices to change. When the demand for a product increases, the price tends to rise as well. Conversely, when the supply of a product decreases, the price tends to increase.
Statement 2: The interaction between supply, demand, and non-price determinants is illustrated by supply and demand graphs. Non-price determinants, such as income, consumer preferences, and government policies, can shift the entire demand or supply curve.
Statement 3: Economists use market models to predict how events impact possible changes in price. By analyzing supply and demand factors, economists can forecast the effects of various events, such as changes in technology, government regulations, or consumer preferences, on price levels.