Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Although all points on the production possibilities frontier are efficient, that alone does not determine which point is "best" for the society.

A society that is inside its production possibilities frontier is efficient.

What is the opportunity cost of economic growth?

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

In a market system, the major coordination tasks are carried out

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

Some economies have production possibilities frontiers that are bowed inward toward the origin.

Monetary costs and opportunity costs are always identical.

The division of labor can benefit society only if

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

If a market system is functioning well, we can conclude that goods with

Efficient production can be carried out anywhere on or beyond the production possibilities frontier.

If the U.S. government decides to increase military spending, a possible opportunity cost could be lower spending on education.

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000. His cousin offered him $3,000 for the ticket. Given this information, Ted's opportunity cost of this ticket is

Why is it inefficient for an economy to be inside the production possibilities frontier?

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

During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain. If not, indicate which economic idea it violated.

Economics is the study of the logic of

The major coordination tasks can be summarized with the questions

A production possibilities frontier has a downward slope because