Order DescriptionAnswer both questions (word count of 1,500 words, approximately 750 words per question)1. Consumer Theory (50 marks)Using consumer theory, consider how households may respond to having their budgets squeezed as a result of the increase in prices of:I. FoodII. EnergyIII. Public transportIV. Foreign holidaysMake particular reference to and isolate any substitution and income effects. Illustrate your answers with diagrams.2. Producer Theory (50 marks)During the last 30 years computers have changed most production processes. Use isocost-isoquant diagram analysis to show the effect the spread of computers have had on labour use during the last 30 years. Make sure you list any assumptions you make clearly. Illustrate your answers with diagrams.70 plus: To achieve a mark in this category, you will need to demonstrate (where appropriate to the topic and exercise) ALL of the following: An excellent grasp of the main economic theories and concepts that relate to the question. An excellent application of economic theory, concepts and tools relevant for the question Excellent use of relevant, well labelled and well explained diagrams Proper use of economic terminology. A clear structure and organisation; and full adherence to conventions of scholarship, such as in the presentation of footnotes and bibliography.60-69: To achieve a mark in this category, you will need to demonstrate (where appropriate to the topic and exercise) most of the above:50-59: To achieve a mark in this category, you will need to demonstrate good ability levels in some or all of the above; and to avoid major weaknesses in any of them.40-49: To achieve a mark in this category, you will need to demonstrate sound ability levels in some of the above; and to avoid major weaknesses in the majority of them.40 and below: This is a FAIL mark. This indicates that there are major weaknesses in the above criteria, with the result that the work is unsound and unconvincing in most respects.