67.What is the difference between positive and normative economics? How can knowledge of positive economics be useful in normative economics?

68.Interpret what an increase in demand and an increase in supply mean. Discuss the causes of an increase in demand and an increase in supply. How are increases in demand and supply expressed graphically?

69.What is scarcity and why does it exist? How is scarcity related to the study of economics?

70.Graphically express a production possibilities curve. What do points on, inside and outside the curve represent? What does a rightward shift of the curve represent? How is economic growth expressed in terms of the production possibilities model?

71.Discuss how a market reaches equilibrium. How is it expressed graphically?

72.Why are all costs really "opportunity costs"?

73.Distinguish the laws of demand and supply. How are the laws of demand and supply illustrated graphically?

74.Discuss the three fundamental economic questions that all nations must address.

75.Distinguish macroeconomics and microeconomics.

Question 3 Consider an exchange economy with two individuals who have initial endowments of two goods, x and y, W1 = (ti, 2), W3 = (2, 4), where the subscripts arc the individuals. These individuals have the following preferences, U1 = 2:1 at in, Hz = 12'; a: y'f'. 3. Find the set of all Pareto optimal outcomes1 the contract curve. b. Draw the Edgeworth box with the initial endowments and the contract curve. Are the initial endowments on the contract curve? :1. How would you solve for the core? (:1. State the rst fundamental theorem of welfare economies. Why is it important? What are its limitations (not the limitations from part (d))? e. Describe a scenario in which the rst fundamental welfare theorem would not apply.