Part 1: Denitions. For each of the following pairs of terms, dene each term and then briey explain the relationship between the two terms [5 minutes and 5 marks each] 1. Indifference curves and transitivity. 2. Marshallian and Hicksian demand functions. Part 2: Short Answer Please write short answer questions to all of the following questions. 1. Explain why the substitution effect is non-positive? [HINI- A proof that the substitution effect is non positive, which can be copied from Varian, will be awarded zero marks. Please explain intuitively and in your own words why the substitution effect is non-positive] [10 marks and 10 minutes] 2. A medical school has received 300 applications from students who want to enrol. The school has the capacity to accept only 120 new students. All the 300 applicants have at least the minimum academic requirements. All have sent cheques for the $6,{XJOIX} tuition fee. The 120 admission offers are based on the medical school's assessment of merit, i.e., the slots are offered to the 120 applicants the medical school thinks will make the best doctors. Applicant ranked #152 has a willingness to pay for medical school of $50,000. Applicant ranked #1 has a willingness to pay for medical school of $10,013}. [15 marks and 15 minutes] (a) Is this admission policy likely to be Pareto optimal? EXPLAIN using a diagram