Economic thinking focuses on opportunity costs and marginal decision-making. Briefly explain these concepts

2. Water is cheap, and we consume a lot of it. Jewellery is expensive, and we typically do not have much of it. Water is necessary for life; jewellery is not. Based on a marginal utility versus marginal cost (i.e., price) approach, explain why something so important to life, like water, is cheap relative to jewellery.

3. Due to its addictive properties, the demand for tobacco is price inelastic. Additionally, due to regulation, the supply of tobacco is also price inelastic. Graph this market. If an excise tax is added to the sale price of tobacco, show how this would impact the market.

4. Rent control and minimum wage are two examples of market interventions, which have socially good intentions. While the benefits are clear (cheaper rent and higher wages), explain the potential short-comings of these policies and why these markets need to be monitored.

Question 1: Economic thinking focuses on opportunity costs and marginal decisionmaking. Briey explain these concepts. Question 2: Consider a good that is transacted in a competitive market. Characterize what happens in this market if there is a recession and the good in question is 'normal'. Further, what happens to the quantity transacted, during this recession, if there is a subsequent rise in input costs? Use diagrams. Question 3: Due to its addictive properties, the demand for tobacco is price inelastic. Additionally, due to regulation, the supply of tobacco is also price inelastic. Graph this market. If an excise tax is added to the sale price of tobacco, show how this would impact the market. Question 4: Rent control and minimum wage are two examples of market interventions, which have socially good intentions. While the benets are clear (cheaper rent and higher wages), explain the potential shortcomings of these policies and why these markets need to be monitored. Question 5: Water is cheap, and we consume a lot of it. Jewellery is expensive, and we typically do not have much of it. Water is necessary for life; jewellery is not. Based on a marginal utility versus marginal cost (i.e., price) approach, explain why something so important to life, like water, is cheap relative to jewellery. Question 6: Consider gas stations that are located in the downtown of a large prosperous city. Gas stations are typically not very protable due to price competition. Given its scarcity, land in an urban setting, is usually valuable. Are we likely to see many gas stations in a central business district? Explain