Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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

In the Wealth of Nations , Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

The U.S. federal government spent more than $4 trillion in 2018, which implies that there were no opportunity costs faced by the United States.

The production possibilities frontier can show a manufacturer's possible combinations of output resulting from the combination of two goods.

If good "A" is represented on the horizontal axis and good "B" on the vertical axis, then the steeper the production possibilities frontier at a given level of production of good "A," the

In Figure 3-7, if we compare a move from point B to C with a move from point A to point B, we can see that

Market economies are not constrained by scarcity; only planned economies have that problem.

Individuals face scarcity; whole societies do not.

In Table 3-2, from combination C , the opportunity cost of 2 more units of cotton would be

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

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

List the three coordination decisions made by every economy.

Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college. Do you agree? Explain.

The central question in economics is how to

The fundamental goal of economics is to

Explain the relationship between opportunity costs and money costs. Can they be treated as identical?

An economist claims that any point not on a production possibilities frontier cannot be best. What is his reasoning to support this?

Adam Smith noted that people are adept at which of the following?