Module 1 1. Explain the three underlying assumptions of economics. 2. Define opportunity cost. 3. Explain why specialization increases production. 4. Clem Oatley could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land. The price of wheat is $2.00 per bushel and the price of barley $ 0.80. Show the benefits to Clem from specialization. What should he specialize in? 5. Explain a budget line. Draw a budget line for a consumer who has a budget of $20 to spend on hamburgers and hotdogs. The price of a hamburger is $5.00 and a hotdog is $2.50