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IL. Short Aerwer Questions: 1. What is scarcity and why does it exin? How is scarcity related to the study of economics? 10 points 2. Discuss the three fundame tions that all nations must address. 10 points 3. Draw a supply and demand curve for cars and graphically illustrate the effect of an increase in the price of steel (an input). Label all axes and curves. 10 points 4. Draw a PPF with cars on the x-axis and TV's on the Y axis. Make sure the PPF exhibits increasing opportunity costs. 10 pointsQUESTION 1 Exhibit: Supply and Marginal Factor Cost Price SO $2 $4 $6 $8 $10 Quantity 2 3 4 5 supplied per period Total factor SO $2 SB $18 $32 $50 cost Marginal Factor Cost Reference: Ref 14-1 (Exhibit: Supply and Marginal Factor Cost) How many units of the factor will be supplied at a factor price of $6? DA. 2 B. 3 OC.4 D, It cannot be determinedThree economic questions must be determined in all societies. What are they? ()a) What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? O b) What goods will be produced? How will goods be produced? For whom will goods be produced? ( c) What will the price of each good be? Who will produce each good? Who will consume each good? d) How much will be produced? When will it be produced? How much will it cost? How do microeconomics and macroeconomics differ? ()a) Microeconomics studies aggregate decision making, while macroeconomics examines individual decision making- (b) Microeconomics utilizes positive economic analysis, while macroeconomics utilizes normative economic analysis. c) Microeconomics is concerned with consumer behaviour, while macroeconomics is concerned with firm behaviour. ()d) Microeconomics studies individual decision making, while macroeconomics examines aggregate decision making