1. The effectiveness of an economic model is evaluated by

a)how well it examines opportunity costs.

b)how many variables it has

c)how well it explains or predicts real world phenomena.

d) how well it incorporates realistic assumptions.

2. When creating economic models, economists focus on the ______________ of people rather than their ______________.

a) preferences; actions

b) desires; wealth

c) actions; thoughts

d) income; demands

3. Consider two variables, X and Y. If Y decreases as X increases, these two variables are said to have a(n) ______________ relationship.

a) inverse

b) direct

c) complex

d) marginal

4. When two variables on a graph have a direct relationship, the slope of a function relating the two variables will be

a) negative

b) positive

c) vertical

d) horizontal

5. The slope of a straight line

a) is different at all points on the line.

b) is the same at all points on the line.

c) is equal to zero.

d) is undefined.

6. The negative slope of the Production Possibilities Frontier illustrates what economic concept?

a) Economic Efficiency

b) Marginal Cost

c) Opportunity Cost

d) Unlimited Wants

7. John has three options with the next hour of his time. In order, he prefers to watch TV, play ultimate Frisbee, and go for a walk. John chooses to watch TV for the hour. What is the opportunity cost of John watching TV?

a) Going for a walk

b) Playing ultimate Frisbee

c) Going for a walk and playing ultimate Frisbee

d) The amount of money John could have earned working for an hour

8. The PPF has a finite boundary. This is most closely related to which economic concept?

a) Opportunity cost

b) Diminishing returns

c) Increasing marginal costs

d) Scarcity

9. If an economy desired technical efficiency, it would strive to

a) eliminate scarcity.

b) eliminate opportunity costs.

c) produce as many goods as possible with its resources.

d) produce the goods that society values the most.