A B C Quantity of Computers Produced D +10 +10 Quantity of Butter Produced The above PPF is for an imaginary economy with a fixed quantity of heterogeneous resources that can produce only computers or butter. 1. (6 marks) Use the production possibility frontier above to answer the following. Answer in complete sentences and refer to the graph as exactly as possible. You may draw/mark on the graph in order to clarify your answers. a. Explain in your own words what an economist means by the concept of "opportunity cost". b. Use the graph above to indicate and explain the opportunity cost to society of moving from point B to point C on the PPF. Use complete sentences. You can label points on your graph. You do not need exact numerical values.c. In one sentence, how does an economy move along the boundary of the PPF (just a very basic, one sentence explanation is required). d. Which is the higher opportunity cost and why? The opportunity cost of butter when moving from point A to point B OR the opportunity cost of butter when moving from point B to point C. Answer in complete sentences. You may mark the graph in order to clarify your answer.2. (6 marks) The next few questions deal with the market for "residential housing". For the purposes of this question you can assume that units of "residential housing" are homogeneous. a. Write out the equation that is used to calculate "own price elasticity of supply". b. In your own words write a definition of the economic meaning of the term "inelastic own price elasticity of supply". c. Why is the short run supply of residential housing considered to be relatively inelastic in supply? d. On the next page, draw a short run supply curve, with well labelled axes, that is relatively inelastic. Label your axes. You do not need to make up numbers for your graph. e. On the same graph, (on the same set of axes) draw a demand for housing curve that is relatively more elastic than the supply curve. f. Label equilibrium price and quantity on your graph. g. Imagine in this housing market, there is an increase in population. What happens to your graph? i. Which curve(s) shift? ii. In what direction? iii. Why? iv. Show clearly on your graph what happens after the increase in population to equilibrium price and equilibrium quantity. Make sure to draw a clearly labelled graph and indicate what shifts and why, and what happens to equilibrium price and quantity. Use the points i./i./ili./iv. above to complete your graph and your answer. Write a summary in words.3. (5 marks) a. In your own words, explain what economists mean by the term "marginal utility". Give a general definition and also use an example. Do not use an example from the textbook or course materials. b. Explain why, when the price of a good that you currently purchase falls, you will probably change your consumption so that the marginal utility of that good will also fall. (ceteris paribus)