include a graph with your explanation.

1.A price floor, such as a minimum wage, causes a surplus. True or false? Explain.

a)Average total cost is always greater than average variable cost by a constant amount. True or false? Explain.

b)In the short run, a perfectly competitive firm always maximizes profit when average total cost is at a minimum. True or false? Explain.

c)When the price of beef falls, the income effect suggests that you feel richer and will buy more of everything. The substitution effect suggests that when the price of beef falls, beef becomes less expensive and you will buy more beef and less chicken. True or false? Explain.

d)People should not worry about tariffs because losses to the consumers are more than made up for by gains to the producer and the government revenues collected from the tariffs. True or false? Explain.

e)If the law of diminishing returns did not hold, we could grow the world's annual crop of wheat in a single flowerpot. True or false? Explain.

2. Newspaper vending machines (to the extent any are left) nearly everywhere in the USA allow you to put in the correct change, lift up the door, and - if you were willing to violate the law - take as many newspapers as you want. In contrast, candy vending machines are securely locked at all times. You must designate the candy that you want, normally by using some type of keypad. The candy then drops down so that you can retrieve it, but you cannot grab any other candy. Explain the difference in these two types of vending machines using one or more economic concepts.

3)Hulk goes to the gym 20 times a month. His income is $1,000 per month and his visits the gym cost $4 per visit.

(i)Draw Hulk's budget line for visits to the gym (on the horizontal axis) and all other goods (on the vertical axis), show the consumption bundle that maximizes his satisfaction, and draw the indifference curve through that point.

(ii)Recently, a new health club opened which offers identical facilities but which charges a flat fee of $60 per month plus an additional $1 per visit. Draw Hulk's budget line if he were to join this new club.

(iii) Would Hulk continue to work out at the gym or would he join the new health club? Why?