1. (2 points) Define opportunity cost and give an example from your own experience. 2.(2 points) Define comparative advantage and explain why it is important. 3. (5 points) Most government policy decisions have winners and losers. What are the effects of raising the minimum wage? It is more complex than simply producers lose and workers gain. Who are the winners and who are the losers, and what exactly do they win and lose? To what extent does the policy change achieve its goals? 4. (4 points) What is the effect on the equilibrium price and quantity of gasoline of the following? In each case, draw a supply and demand diagram. Increase in consumer income b. Consumers expect higher prices next week c. The price of oil increases d. Electric cars become cheaper to buy 5.(4 points) Suppose that lawmakers pass a law that makes "payday lenders" illegal. a. Describe the effect on the market for loans. Use a supply and demand diagram b. Why might some people favor such a law? c. /What are the negative effects of such a law? d. What is your opinion on such a law? Justify your opinion. (Credit for this part is based not on your opinion, but on how you justify it.) 6. (2 points) Suppose that you have a budget of $40 per week to spend on gasoline and cookies. Suppose that gasoline is $2 per gallon and a box of cookies is $8. What is the maximum numb of gallons of gasoline you can buy with your budget? b. What is the maximum you can buy with your budget? . Draw a budget constra bilities. What is t of cookies