Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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Individuals face scarcity; whole societies do not.

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Since it is a centrally planned economy, China does not face opportunity costs when economic decisions are made.

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A society that relies on a market-based economy will always protect the natural environment.

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An optimal decision is one that chooses the most desirable from among all possibilities that are available.

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A production possibilities frontier shows the combinations of various goods that should be produced.

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What mechanism assures that firms produce outputs that consumers actually desire?

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What is the division of labor? How does it raise efficiency and productivity?

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What mechanism assures that producers use inputs efficiently?

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A country can gain by importing a good from abroad even if that good can be produced more efficiently at home. Is this statement true?

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

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Do all valuable items have price tags?

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If the production possibilities frontier for two goods is shown as a straight line, this implies that

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Voluntary exchange results in mutual gains.

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Every economic decision involves a trade-off because of

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The U.S. government spent over $4 trillion in budget year 2018.

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Hutch Technology makes computer monitors, which sell for $100 each. What is the opportunity cost of 10 monitors?

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Economic growth solves the problem of scarcity.

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

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

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A ticket to an Eric Clapton concert costs $45. If you have a ticket, you can "scalp" it (sell it illegally)for $75. To a ticket holder, the opportunity cost of actually attending the concert is

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