1. Which of the following situations represents an economic problem?

a) A student trying to decide how to spend his weekly allowance.

b) A country choosing to sacrifice some privacy in order to gain more security.

c) Neither situation is an example of an economic problem.

d) Both situations are examples of an economic problem.

2. Tyrone has three options on how to spend his Saturday afternoon: go out with friends, watch a movie, or wash his car. Tyrone's opportunity cost of washing his car would be:

a) The value of going out with friends.

b) The value of watching a movie.

c) The value of going out with friends AND watching a movie.

d) The value of going out with friends OR watching a movie.

3. Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. Your decision on what to study should be based on:

a) The additional benefits of studying for each class.

b) Which class you like the most.

c) How much time you have already studied for each class.

d) Your current average scores in each class.

4. Suppose you and your roommate have the following agreement when it comes to cleaning your apartment: each person washes her or his own dishes after each meal. The principle of trade you just learned tells you that it would be more efficient if:

a) Both of you wash your own dishes after each meal.

b) Neither of you wash the dishes after eating.

c) Each of you wash half of all the dirty dishes.

d) One of you wash all the dishes while the other does a different chore.

5. Suppose you are trying to understand the effect that an increase in the price of grapes will have on the market for wine.

An effective model to determine this effect is one that evaluates the change in the price of grapes on the market quantity of wine assuming:

a) Buyers' incomes also change.

b) Buyers' preferences and incomes also change.

c) Some wines use different grapes.

d) No other change takes place.