Please deliver only one file. Preferably, send a pdf file. List all the sources you have research during this assignment.

Exercise 1

Imagine an audience consisting of non-economists who have never taken a single lecture on economics. Use your own words and provide examples to explain the following.

a) What does it mean for preferences to be complete? Does it always make sense to assume that

preferences are complete?

b) What does it mean for preferences to be transitive? Does it always make sense to assume that

preferences are transitive?

Exercise 2

This exercise is about the model of consumer choice. Suppose that Adam, our consumer, buys only two goods: pizza (X, on horizontal axis) and soda (Y, on vertical axis). There are no other goods (it is a simplification).

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Next, suppose that the price of pizza increases while all other variables (price of soda, Adam's income, and Adam's preferences) remain the same. What is going to happen with Adam's consumption of pizza and soda? Provide explanation and graphical analysis.

Exercise 3

Two demand-supply analyses. In each case, start with clearly specifying who the buyers (demand) and sellers (supply) are. Then, conduct the supply-demand analysis; here, clearly explain the mechanism: which curve (demand, supply) shifts and why. Provide a graphical analysis in tandem with explanation. Finish with conclusions.

Hints. Please, do not overcomplicate. Focus on the events/shocks described in each case; do not go beyond that. In (a), only one side of a market is affected; in (b), both demand and supply sides are affected.

a) According to the article published yesterday (October 27, 2020) in Arab News (source: https://www.arabnews.com/node/1754616/saudi-arabia), "more Saudi women want to specialize in cybersecurity as it becomes one of the Kingdom's most in-demand sectors, according to experts." Based on that news and assuming that the labor market for cybersecurity experts is perfectly competitive, conduct the demand-supply analysis. Make sure you correctly determine who constitutes supply and who generates demand in this market. Next, think about how women becoming more interested in cybersecurity changes the market.

b) Suppose that the market for consulting services in Saudi Arabia is perfectly competitive. Two events of interest have taken place. First, the government opened this market for foreign firms who gladly enter the market. Second, local businesses have discovered that business consulting is actually a useful service for them. What do we expect to happen in this market? Conduct the demand-supply analysis.