Quiz

1. Suppose that you are indifferent between seeing a seeing a move or going to a concert on a particular Saturday evening. You are willing to pay $20 to see the movie and the movie ticket costs $5. You are willing to pay $80 for the concert. What must be the price of a concert ticket?

 a) $5.

 b) $95.

 c) $65.

 d) There is insufficient information to figure out the price of the concert ticket.

2. According to marginal analysis, optimal decision-making involves: 

a) Taking actions whenever the marginal benefit is positive. 

b) Taking actions only if the marginal cost is zero. 

c) Taking actions whenever the marginal net benefit is positive. 

d) All of the above. 

3. Suppose that - at a given level of some economic activity - marginal benefit is less than marginal cost. The economic agent in question (the decision-maker) can increase net benefits by decreasing the level of the activity, for which of the following reasons? 

a) Total costs will fall by more than total benefits. 

b) Total benefits will rise by more than total costs. 

c) Neither a) nor b). 

d) Either a) or b).

4. Which of the following statements about production and trade is TRUE?

 I. If a country has the comparative advantage in producing a good, then it that country will import that good. F 

II. If a country has the absolute advantage in the production of a good, it will export that good. F 

III. Trade allows countries to consume bundles of goods that lie outside their production possibilities frontiers. T 

a) I only. 

b) I and II only. 

c) I, II and III. 

d) III only