Exam 3: The Fundamental Economic Problem: Scarcity and Choice

According to the principle of increasing costs, as the production of one good expands, the opportunity cost of producing another unit of the good tends to increase.

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

The principle of comparative advantage helps explain trade between nations.

Which of the following characteristics of a PPF indicates that tradeoffs must be made?

Given its size, the United States does not have to worry about limitations on resources.

Since it is a centrally planned economy, China does not face opportunity costs when economic decisions are made.

In an attempt to boost enrollment, in January, 1996, a private college in Iowa offered free tuition for graduating high school seniors from the county where it is located.For students who accepted the offer, how did this offer affect the opportunity cost of attending college?

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

If society produces at a point inside the production possibilities frontier, it is characterized by full employment of resources.

At various time, the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close.How can one rationally decide which bases to shut down, given the necessity of jobs?

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

The division of labor benefits society only if

The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that

The opportunity cost of increased production of some good can be measured with

The major coordination tasks can be summarized with the questions

Economics is the study of the logic of

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

Scarcity is the fundamental problem of the economy.

Specialization in production

Opportunity cost always arises when a trade-off decision is made.