1. Which economic principle is applicable in each of the following cases? Justify your answer. (2 marks each)

a. Saudi Arabia and Russia, the two largest producers of oil, increased the production of oil in March 2020, leading to a sharp decrease in the price of oil, worldwide. A further decrease in the global demand for oil due to the COVID-19 pandemic exacerbated the problem by decreasing the oil price below zero. As a result, 50,000 jobs vanished in the US oil industry.

b. During the COVID-19 pandemic in Canada, many people lost their jobs and many industries shut down their businesses. In this difficult time, federal and provincial governments intervened and announced financial support for local businesses and for citizens who lost their jobs. This support works against the "free market economy" view that suggests that markets should work without government intervention.

c. The difference between the standard of living in the USA and Pakistan is huge. One common factor between the two countries is that both countries have a population of more than 200 million. Pakistan has a low standard of living because workers there do not have proper education or skills and do not have access to capital and technology.