Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home. The researcher included all costs including the imputed value of time involved to prepare the meal at home. This study illustrates the

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

Adam Smith's book, one of the first systematic treatments of economics, was entitled

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

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

The workers in Adam Smith's famous pin factory, who were proficient in pin production, faced the problem of

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

Any point on or outside the production possibilities frontier is attainable.

A typical economy produces thousands of different goods. Is it accurate to say that society faces a production possibilities frontier?

The law of comparative advantage explains why

Economics studies the logic of choices made from among available possibilities.

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

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

For a given production possibilities frontier, which points are attainable?

Scarcity is a concept that applies to all of the following except

The opportunity cost of a college education includes wages lost while enrolled in school.

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

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

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

A society can occasionally produce at a point beyond its production possibilities frontier if there is an economic crisis.