Course Name and Number: MBAF 504: Business Economics Project I Team Project: Economic Reasoning Due: Sunday 23:59 pm of week 3 This team project is designed to use the theories involved in economic decision-making and economic thinking. In this project, you will identify how economic units behave under scarcity and make rational and irrational choices. This work accounts for 15% of your total grading of the course. This project has the following two main parts: PART ONE: IRRATIONAL DECISION-MAKING Consider a good or service where consumers pay more than its actual valuation (e.g., products with markup prices at retail significantly higher than their costs: greeting cards, bottled water, stock price, movie theater popcorn/candy, etc.) or a situation where people make a choice at a loss (stock market bubble, shame, and pride, urgency purchase- last-minute shopping etc.). Based on the economic principles covered in the class (scarcity, value, price, opportunity cost, rational Vs. irrational decision making, and marginal analysis), explain why such irrational decision-making could take place in this situation. PART TWO: RATIONAL DECISION-MAKING 1. Production Possibilities: Consider a hypothetical economy with a limit in its production to two main products (healthcare and education, consumer and capital goods, etc.). For this economy, draw the production possibilities under scarcity where the hypothetical economy has to make a choice of production and discuss the opportunity costs and marginal rate of substitution of its production and consumption decisions. 2. Choice under scarcity: Consider an actual scarce resource that requires efficient allocation and provide an economic analysis that applies to this scarce resource for a given economy (e.g., underground water, ocean and biodiversity, arable land, vaccines, etc. ). In this analysis, consider the following: a. Explain why scarcity of this resource exists for the economy under consideration. Use data to justify