Q.3 Briefly explain the following concepts.

i. Economics is concerned with the analysis of scarcity of resources and plenty of demands". Discuss.

ii. What is the difference between fixed and variable costs? Describe the shape of the total variable cost curve and explain why the vertical distance between the total cost and total variable cost curves is constant.

iii. Would do you expect the cross elasticity of demand for cereal with respect to changes in the

price of milk to be positive or negative? Why? Would the cross elasticity of demand for cereal with respect to the price of butter be positive or negative? Explain.