​​​ Question 1 What is Economics? How do scarcity, choice and economic interactions fit into the definition of economics? How can the rationality principle and the ceteris paribus assumption be used to explain a specific example of everyday decision-making either by you, a firm, or the government? (4 Marks) Please note: Answers to Questions 2 and 3 are to be submitted into your lecturer's locker on level 4. Question 2 [Parts a) and b) require you to find some background information and knowledge on crude oil]. a) Crude oil is a world commodity and the primary input into the production of many products. Name some goods produced from crude oil or produced using crude oil as a main input. b) Who are some of the largest producers of crude oil? List the largest 5 companies that produce oil. Name the 10 largest owners of oil resource? Consider the market for crude oil. Assume that the crude oil market is a competitive market, where there are many buyers and sellers. c) Answer the following questions using concepts from the Demand and Supply model and concepts on elasticity of demand and supply. Start your answers for each part below with a Demand and Supply graph showing the crude oil market initially in equilibrium. Explain what happens to the market demand, supply and equilibrium price and quantity when the following happen: i) The global financial crisis (GFC) starts in the United States of America in 2007/2008 ii) War breaks out in the Middle East, and the countries that supply oil are directly involved in the war iii) War breaks out in the Middle East, and the countries that supply oil are not directly involved in the war. Your answers should include some comment on how the elasticity of demand and/or supply impacts on the magnitude of change in market price and quantity where relevant, in terms of global or international oil prices and in terms of the national (local) market for oil in those countries mentioned in the questions. (1 + 1 + 8 Marks) Question 3 This question is about oil prices for the period 1970 to 2014. Use the data provided in the MS Excel file "Data for crude oil prices" attached. Present this data in a time-series line chart/graph using MS Excel. The graph must be titled and the source cited. Comment on the movement of oil prices through the four decades and give possible reasons for the changes in oil prices especially for the periods that had significant change in prices.