True or False 1. Scarcity affects everyone, even billionaires. 2. The terms scarcity and shortage are synonyms. 3. When a person is making a decision at the margin, he or she is comparing the additional benefit of that activity to the additional cost of the proposed action. 4. To an economist, an increase in demand means the same thing as an increase in quantity demanded. 5. Mutually beneficial trade between buyers and sellers drives a market to equilibrium. Analysis 1. You set-up a food stall in a mall and befriended the stall owner beside yours. You found that when analyzing the cross-price elasticity of demand, you and your friend are selling substitute goods. Is it a good thing? Why or why not? What strategy will you employ to be more profitable? 2. H&M subcontracted one of the Bangladeshi companies in their garment manufacturing; however, the Bangladeshi factory where the manufacturing takes place collapsed; explain in terms of supply and/or demand how the collapse impacted each of the following markets: a. Domestic garments (Bangladesh) b. Imported garments (garments made outside Bangladesh) c. H&M clothing 3. Discuss three possible solutions for reducing traffic congestion in EDSA. Be sure to explain what effect each solution would have on the supply and/or demand for EDSA road space and discuss how the Ten Principles of Economics are related to each solution.