Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Opportunity costs exist for

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

Which of the following is not an example of a type of factor of production?

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

Specialization of labor makes sense only if there is some means of exchange.

Opportunity cost is the value of the next best alternative that is given up.

Employment discrimination is a source of

The concavity or bowed-out shape of the production possibilities frontier is the result of

If production involves decreasing opportunity cost, the production possibilities frontier

Economists use the term capital to describe that factor of production that includes human-made resources such as factories, buildings, machinery, and tools.

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

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

Which of the following ideas of Adam Smith has religious overtones?

If an economy is producing inefficiently, it is

All actions and purchases, even those of wealthy people, involve a sacrifice.

Which of the following does not determine the position and shape of a society's production possibilities frontier?

A rational decision is one that

In the 1960s, the lyrics of a rock song asked, "Did you ever have to make up your mind to say yes to one and leave the others behind?" What economic principle was demonstrated in the song? Explain.

The statement "Resources employed in producing X are better suited to making Y" is another way of saying resources

While specialization and exchange were very important to Adam Smith in 1776, they have largely lost their importance in the 21st century.