|_l Based on: Three Ways in which economists think What economists do "he Consumer Choice Model, the Production Possibilities Frontier (PPF) Model 'he Demand/Supply Model How Economists Think 1} Briefly describe the term "Scarcity\" and provide two practical examples of this concept. What does Scarcity force people to do? Please explain... 2} Amber has $150 to provide for one of two spending choices: (a) A new Economics textbook or {b} A ticket to a Sean Mendes concert... {a} If Amber decides to go to the concert, what accounting cost and opportunity cost does she face? Please explain... {b} What is Am ber's opportunity cost of buying the textbook? {C} Is there any way that she can avoid facing an opportunity cost? Explain... 3} Mu Ying has recently received a $40 000 inheritance from her father. She has considering using the money in three possible ways (in no particular order of preference): {a} Invest it in a Registered Retirement Savings Plan (RRSP) {in} Purchase a new car {c} Pay off her education debt from going through law school Questions: {Q What is Mu Ying's accounting cost and opportunity cost if she decides to off her education debt? Please explain... {ii) Suppose once again that Mu Ying decides to pay off her debt, but she reveals that she prefers purchasing the new car to investment in the RRSP. What is her opportunity cost of paying off her education debt in this case? Explain... {iii) Is it possible for Mu Ying's opportunity cost of paying off her debt to be both the new car and investment in the RRSP? Explain... 4} Over the past few months, during the Pandemic, several governments have announced lockdowns, where businesses are shut down and people are asked to remain at home. What are some Marginal Benefits of lockdowns and Marginal Costs of lockdowns? Using Marginal Analysis, how can government justify the use of lockdowns? Explain... \\Mhn'r Frnnnmic'l'c Hm What Economists Do 5} Which of the following topics relate to Microeconomics or Macroeconomics? Please explain... {a} An increase in the minimum wage (all else equal} reduces the demand for workers in several fields {[3] An increase in the price of graphite raises the price of tennis racquets {c} Lower interest rates increase the demand for goods and services which raises Gross Domestic Product (GDP) {d} The effect of an increase in public transit prices on the demand for public transit rides 6} Consider the following economic model of New Home Sales in the Greater Toronto area: New Home Sales {H} = [ Location {L}, Price of New Homes (P), Mortgage rates (r), Population {POP}, Income (Y), Advertising {A} } {a} Briefly outline the Independent and Dependent variables in this model {b} Use the above model to state one theory that shows a positive relationship and one that shows an inverse relationship. Explain any assumptions that are made. {c} Using the above model, an economist proposes the following theory: \"As income increases, new home sales will increase as well\" Briefly explain why the "Ceteris Paribus\" Assumption is important in such a theory... 7) Draw graphs of the following relationships (Hint: first decide which variable is dependent/independent, then consider the relationship between the variables): {a} Labor time and Leisure time {all else equal) {b} A firm's costs and profits [all else equal) {c} Economic output (production) and the level of capital (all else equal} {d} The price of apples and consumer demand for oranges (all else equal) Consumer Choice Model: 8} Melinda earns $400 a month from her part-time job. She buys only two goods: X and Y. Good X costs $20 each and good Y costs $40 each. {a} Using a chart, illustrate Melinda's budget constraint. {b} Give one example of an allocation that is unaffordable for Melinda. Explain why. {c} Draw a graph of Melinda's budget constraint. Explain how it illustrates the concept of Scarcity