Exam 3: The Fundamental Economic Problem Scarcity and Choice

Only a market economy must answer the questions of what goods to produce, how to produce them, and for whom to produce them.

The statement "Resources employed in producing X are better suited to making Y" is another way of saying resources

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

If an economy wants to experience economic growth, what decision must it make and carry out? Explain.

What is the opportunity cost of economic growth?

Table 3-2 -From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

How are money cost and opportunity cost related to each other?

Opportunity costs exist for

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

​Adam Smith believed that markets coordinated the self-interests of consumers.

Although all points on the PPF are efficient, that alone does not tell us which point is "best" for the society.

What determines the position and shape of a society's production possibilities frontier?

Market economies are not constrained by scarcity; only planned economies have that problem.

Opportunity cost is best defined as the value of

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

As a general rule, an increase in the capital available to a society

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Any point on or outside the PPF is attainable.

All actions and purchases, even those of wealthy people, involve a sacrifice.

The divergence between money costs and opportunity costs is the least in which of the following situations?