Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Some environmentalists argue that the scarcity of physical resources such as fuel means that

Rob took the afternoon off from his job as a tire salesman to mow his lawn. Rob told his wife that this made sense because he would be saving the $50 he would have to pay a lawn service, noting that this would be the opportunity cost to the family. Rob's wife disagreed. What did Rob's wife say?

Adam Smith's discussion of the production in a pin factory illustrates the law of comparative advantage.

Figure 3-2 -In Figure 3-2, a move from a point like B to a point such as D

Scarcity is a concept that does not apply to

Monetary costs and opportunity costs are always identical.

A large government encounters a production possibilities frontier essentially the same as one faced by a business firm.

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

Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not. Explain the shape of the curve. What assumptions did you make in drawing it?

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Employment discrimination is a source of

Economics is the study of the logic of

If production involves decreasing opportunity cost, the production possibilities frontier

Efficiency is defined as minimizing waste.

The idea of opportunity cost is relevant

Economics is often described as a science of constrained choice. How do you justify this argument?

Which of the following is considered by economists to be the most fundamentally scarce?

The divergence between money costs and opportunity costs is the smallest in which of the following situations?

The profit motive leads firms to use inputs efficiently.

The most important way in which inefficiency occurs is