Describe whether the statements are true or false. Explain your answers:

1.) Your uncle is considering taking a two-week long cruise from Los Angeles to Alaska and back. The price of the cruise is $10,000, and this price is all-inclusive (i.e., it covers all expenditures for the whole two weeks: transportation from your uncle's house to the cruise ship, meals, entertainment, etc.). It is rational for your uncle to go on the cruise as long as the benefit that he derives from it is greater than $10,000.

2.) When the price of cereal decreased from $5 per box to $4 per box, this caused your neighbor's consumption of cereal to increase from 20 boxes per year to 30 boxes per year. If the substitution effect of this price decrease was responsible for increasing your neighbor's consumption by 10 boxes per year, then cereal must be an inferior good.

3.) If a firm has constant returns to scale, this implies that if the firm increases the amount of labor that it uses in the short run, there will always be a proportional increase in output (e.g., if it uses twice as much labor, it will produce twice as much output).

4.) When the government imposes a maximum price (price ceiling) below the equilibrium price in an initially efficient market, this will make consumers better off but make producers worse off.