Multiple choice

1. Whatever must be given up to obtain something is called: 

Externality

Comparative Advantage

Opportunity Cost

Specialization

2. The price of gasoline has more than doubled in the past couple years. Which graph applies to this story? 

Graph A

Graph B

Graph C

Graph D

3. To develop economic models, economists make assumptions. The purpose of this is: To include as many aspects of reality as possible

To develop a universal macroeconomic theory

To simplify reality, so the models can help us see the most important aspects.

None of the above

4. The ability to produce a good at a lower opportunity cost than another producer is called: 

Substitution effect

Externality

Comparative Advantage

Absolute Advantage