Pre/Post Assessment

Sara decides to spend five hours working overtime rather than going to the movies with her friends. She earns $15 per hour for overtime work. Her opportunity cost of working is:

• the $75 minus the enjoyment she would have received from going to the movies.

• nothing, since she would have received less than $75 worth of enjoyment from going to the movies.

• the enjoyment she would have received had she gone to the movies.

• the $75 she earns working.

Which of the following best states the law of comparative advantage?

• Tariffs and quotas are beneficial in increasing international competitiveness

• Difference in relative costs of production are key to determining patterns of trade

• Nations should not specialize in the production of goods and services

• Differences in absolute costs of production determine which goods should be traded

Using equal amounts of resources, Country A can produce either 30 tons of mangoes or 10 tons of bananas, and Country B can produce either 10 tons of mangoes or 6 tons of bananas. Which of the following is consistent with the information above?

• Comparative advantage in banana production; Absolute advantage in mango production

• Absolute advantage in banana production; Absolute advantage in mango production

• Comparative advantage in banana production; Comparative advantage in mango production

• Comparative advantage in mango production; Comparative advantage in banana production

If Jan produce can produce 4 sweaters or 8 potatoes in one hour, and Tom can produce 3 sweaters or 9 potatoes in one hour:

• Jan has an absolute advantage in sweaters and a comparative advantage in potatoes

• Jan has an absolute advantage in sweaters and a comparative advantage in sweaters

• Tom has a comparative advantage in potatoes and no absolute advantage in either good

• Tom has a comparative advantage in sweaters and an absolute advantage in potatoes

• None of the above

Which of the following is an important attribute of a market economy?

• Equal distribution of income

• Collective ownership of resources

• Protection of property rights

• Centralized economic decision making

Rational people make decisions at the margin by:

• following marginal propensity to consume.

• making decisions based on random expectations.

• comparing marginal costs and marginal benefits.

• thinking only about future income.

If an increase in the price of good X causes a decrease in demand for good Y, good Y is:

• a luxury good.

• an inferior good.

• a complement for good X.

• a substitute good for X.

• considers handbags to be a necessity.

• considers handbags to be a normal good.

• considers handbags to be an inferior good.

• has a low price elasticity of demand for bags.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

• Both the equilibrium price and quantity would decrease.

• The equilibrium price would decrease, and the equilibrium quantity would increase.

• Both the equilibrium price and quantity would increase.

• The equilibrium price would increase, and the equilibrium quantity would decrease.

Consider the market for raspberry jam. Many people consume raspberry jam with biscuits. What would be the impact on the raspberry jam market if the price of flour increased?

• The supply of jam increases

• Price of biscuits would rise, so people will demand less jam

• Price of biscuits would fall, so people demand more jam

• Price of biscuits would rise, so people demand more jam

• Price of biscuits would fall, so people demand less jam