Exam 3: The Fundamental Economic Problem: Scarcity and Choice

You have invested $1,000 in a stock whose price is increasing at 10 percent a year. Your stock broker, who is never wrong, recommends a stock rising at 20 percent a year. Assuming the broker earns 4 percent of the stock's value on any purchase or sale of the stock, should you take his or her recommendation?

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.

Rational production decisions require an understanding of

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

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.

If society produces at a point inside the production possibilities frontier, it is characterized by full employment of resources.

The production possibilities frontier slopes downward and to the right because of limited resources.

Opportunity costs exist for

The division of labor generally refers to splitting

The central question in economics is how to

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000. His cousin offered him $3,000 for the ticket. Ted chose to attend the game. From this, we can infer that Ted's value for this ticket was

A point lying inside (under)a production possibilities frontier indicates that

If an economy is operating inefficiently, then

The concept of opportunity cost only applies to societies that operate in a market-based economy.

Because of scarcity, every economic decision involves

Figure 3-6 In Figure 3-6, assume this economy is currently operating at point D. What is the opportunity cost of moving to B?

If a society uses the market system, only markets are available to solve all of its problems.

Figure 3-4 -Which of the following would make point Q in Figure 3-4 attainable?

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

If the economy of Gwondanaland is growing more rapidly than the economy of Japan, most likely