Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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.

A market system (market economy) depends on the market to

Waiting in line for a free ticket involves no opportunity cost.

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

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

Economics is the study of the logic of

Voluntary exchange

Which of the following is an example of opportunity cost not measured by money cost?

The problem of scarcity

If the budget deficit was eliminated, the federal government would have more money than it could spend.

A rational decision is one that

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

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home.Is this statement true?

Inefficiency in an economy can be caused by

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

The concept of opportunity cost only applies to societies that operate in a market-based economy.

The most important way in which inefficiency occurs is

Inputs in production processes are called resources.