1. Describe the role of prices in market economics.
2. Consider the following events: Scientists reveal that consumption of oranges decreases the risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees more productive. Explain what effect these changes have on the equilibrium price and quantity of oranges.
3. When a good is limited, some means must be found to ration the scarce commodity. Some examples of rationing devices are auctions, ration coupon, and first-come, first-served systems. What are the strengths and weaknesses of each? Explain carefully in what sense a market mechanism "rations" scarce goods and services.