Exam 3: The Fundamental Economic Problem: Scarcity and Choice

If a farmer's opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans, then his or her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.

Economics studies the logic of choices made from among available possibilities.

The scarcity of physical resources is far more fundamental to the study of economics than the scarcity of funds.

In a market economy, the decision regarding allocation of resources is made by

The production possibilities frontier has a tendency to bow outward from the origin.

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

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

Individuals face scarcity; whole societies do not.

An optimal decision is one that chooses

Which of the following characteristics of a production possibilities frontier indicates that trade-offs must be made?

The division of labor generally refers to splitting

The definition of efficiency implies that production is carried out on the production possibilities frontier.

The term "satisficing" indicates an optimal choice.

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

Which of the following is a listing of the types or categories of resources?

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

If the production possibilities frontier for guns and butter is bowed outward from the origin, this indicates constant opportunity cost between the two goods.

The profit motive leads firms to use inputs efficiently.

The law of comparative advantage explains why

Some environmentalists argue that the scarcity of physical resources such as fuel means that