1. The New Zealand Ministry of Education recently required that high schools must hire five additional teachers withMaster'sdegrees in Mathematics.

a). It will take a few months to initiate the hiring process. Discuss the immediate effect on the salaries of teachers withMaster'sdegrees in Mathematics?Illustrate graphically the effects on the market for Master's degree mathematicteachers in the short-run.

b). What will be the effect after five years? Discuss and illustrate graphically the effects on the market for Master's degree mathematic teachers in the long-run. How does the salary in the long-run compare to the short-run and why?

c). Discuss the differences between the short-run and long-run elasticities of supply.

2. Suppose Bob is only willing to buy a bike seat if he can also buy a bike seat cover to go with it, i.e. Bob needs an equal number of bike seats and bike seat covers. Bob has $100 in income.

a. Suppose bike seat covers cost $1 and bike seats cost $19. How many of each will Bob buy? Discuss and illustrate graphically.

b. Suppose the price of bike seats increases to $49. How will Bob react to the price change? Discuss and illustrate on the same graph as in part a.

3. Suppose Bob consumes pedal bikes and e-bikes. The price increases for pedal bikes and Bob continues to purchase the same quantity as before the price increase. Illustrate graphically the price-consumption curve and pedal bike demand curve on two separate graphs given this information. Discuss the directions and magnitudes of the income and substitution effects. Are pedal bikes normal or inferior for Bob? Explain.

4. Bob realizes that if he employs an additional bike builder, then he will be able to increase the number of bikes built in his bike shop by 15 bikes per day. The daily salary he will need to pay the bike builder is $200. How much is the cost for an additional bike? Describe the general relationship between the marginal product and marginal cost curves.

5. The FMG Stadium in Hamilton faces a downward sloping demand curve for tickets to rugby games and the stadium has a fixed number of seats available. Assume the marginal cost of filling a seat is zero. Why might FMG Stadium decide not to sell out every rugby game even though the marginal cost of selling additional seats is virtually zero? Discuss and illustrate graphically.