Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Opportunity cost is the combined value of all of the other alternatives that go unselected.

In a market economy, opportunity costs are always synonymous with explicit monetary costs.

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

In Figure 3-2, a point such as A

Probably the most important source of efficiency in production is

Resources are used to create goods and services.

Suppose the U.S. government has an annual budget of about $4 trillion. Does the U.S. government face the problem of scarcity?

A decrease in the unemployment rate will shift the production possibilities frontier outward from the origin.

A society's decision to produce more tanks may require it to reduce the production of some cars.

The shape of the production possibilities frontier in Figure 3-1 implies that

Optimal decisions are made based upon the concept of opportunity cost.

The division of labor generally refers to splitting

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

How do economists define efficiency? Elaborate.

Increasing opportunity cost tends to occur if

Table 3-2 The concept of opportunity cost can be represented graphically by the

If the producer is at combination B as shown in Table 3-2, the opportunity cost of increasing corn production by 1 unit is

Scarcity can be measured only through the use of monetary costs.

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

Figure 3-3 In Figure 3-3, a shift from A to B seems most consistent with which of the following scenarios?