Exam 3: The Fundamental Economic Problem Scarcity and Choice

Workers in Adam Smith's famous pin factory example, who were proficient in pin production, then faced the problem of

Division of labor has caused output to rise dramatically since the industrial revolution.

The production possibilities frontier slopes downward and to the right because of limited resources.

How does scarcity affect the range of possible choices that decision makers face?

Resources are used to create goods and services.

A market system solves the

Table 3-2 -In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely

If the production possibilities curve is a straight line,

The opportunity cost of a college education includes wages lost while enrolled in school.

If production involves increasing opportunity cost, then moving nearer the horizontal axis will increase the opportunity cost of

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

If production involves decreasing opportunity cost, the production possibilities curve

Which of the following is considered by economists to be the most fundamentally scarce?

Figure 3-4 -In Figure 3-4, for which of the following would this statement be true: "To get more apples we have to give up wheat." A movement from

Being on the PPF implies that increasing the production of one good or service can only be accomplished by decreasing the quantity produced of another good or service.

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

Specialization and division of labor are made easier by the existence of money.

Figure 3-4 -Which of the following would make point Q in Figure 3-4 attainable?

What mechanism assures that producers use inputs efficiently?