Please answer any question you want.Especially 2 and 3. Question1 Explain briefl

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Please answer any question you want.Especially 2 and 3.

Question1 Explain briefly the concept of "model construction" as part of the methodology of economics as a social science. Question 2: Consider the market for good X. Increase in input costs increases the cost of production. At the same time, consumer preferences are observed to change in favor of the good. How will the market equilibrium be effected? (Important: Explain the relevant market mechanisms clearly.) Question 3: Consider a consumer that consumes two good, X and Y. For this consumer, the following is observed: MUx/Px

Explanation / Answer

4. Since price is a function of demand and supply when demand for a commodity increases the price of that commodity falls accordingly. Also when supply decreases due to reasons like increase in cost of technology or rise in cost of factors of production, the price will increase accordingly.

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