Exam 3: The Fundamental Economic Problem Scarcity and Choice

Opportunity cost is best defined as the value of

An optimal decision is one that is selected based on an analysis of

Which of the following is a good example of efficient specialization and voluntary exchange?

Inefficiency in an economy can be caused by

A market system is not considered an effective way of controlling self-interest.

The major coordination tasks can be summarized with the questions

The money cost of a particular good will approximate its opportunity cost if

What mechanism assures that firms produce outputs that consumers actually desire?

Adam Smith noted that people are adept at pursuing their own self-interests,and that ____ harnesses this self-interest remarkably well.

Economics is generally concerned with

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

Figure 3-2 -In Figure 3-2,a point such as E

Although specialization of labor increases efficiency of production,it can lead to another major problem:

If the quantity of one good that must be forgone increases as successive units of another good are produced,then there is said to be increasing opportunity cost between the two goods.

Waiting in line to get a free ticket does not involve any opportunity cost.

In a market system,____ distributes goods among consumers in accord with their tastes and preferences,using voluntary exchange to determine who gets what.

According to Baumol and Blinder,recognition of the usefulness of markets

In the 1960s,the lyrics of a rock song asked,"Did you ever have to make up your mind to say yes to one and leave the others behind?" What economic principle was demonstrated in the song? Explain.

Figure 3-7 -What is the opportunity cost of moving from point B to point A in Figure 3-7?

Centrally planned economies are not constrained by the problem of scarcity.