f. Assume that you are tasked with predicting price and quantity changes in the market for apples (which are considered an inferior good). Given the following situations, explain what youmight expect to occur to the price and quantity of apples, ceteris paribus.: i. A new study is released that claims eating apples improves one's health ii. An early frost one yearkills a significant amount of apple trees. ii. The price of oranges rises. iv. A new machine is introduced that makes it easier to pick apples v. Wages for apple pickers rise, while at the same consumerincomes rise. g. In what ways do price ceilings and price floors cause inefficiencies? Knowing this, why do they continue to be used as policy tools? h. Why do we say that a positive externality leads to anunderallocation of resources? Give an example of one and a specific policy (relevant to your example) thatmight correct it. i. Why do we say that a negative exterality leads to an overallocation of resources? Give an example of one and a specific policy (relevant to your example) that might correct it. j. What is the free-rider effect and what characteristics do goods that generate the free-rider effect have? Howmight government policy deal with these types of goods? k. Is education a public good? Why or why not?2. Short Answer: In a fewsentences and or using a diagram, answer the following questions (10 points) a. What are the five key assumptions for a perfectly working market? b. What three economic reasons do we use to justify the Law of Demand? What two economic reasons do we use to justify the Law of Supply? c. What is the difference between a change in demand (or supply) and a change in quantity demanded (or quantity supplied)? d. In a perfectly working market, how does the price system ensure an efficient allocation of resources? In other words, how does the price system eliminate shortages/surpluses? e. What is the effect on prices and quantity when the following occur, ceteris panbus? i. Demand increases ii. Supply increases 1ii. Demand decreases iv. Supply decreases v. Demand and Supply both increase vi. Demand and Supply both decrease vii. Demand increases while Supply decreases vili. Demand decreases while Supply increases