Exam 3: The Fundamental Economic Problem: Scarcity and Choice

In an attempt to boost enrollment,in January,1996,a private college in Iowa offered free tuition for graduating high school seniors from the county where it is located.For students who accepted the offer,how did this offer affect the opportunity cost of attending college?

If two persons trade,one must gain at the expense of the other.

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

The fundamental goal of economics is to

The opportunity cost of increased production of some good can be measured with

Because of scarcity,every economic decision involves

One popular definition of economics is the study of

How are the slope of a production possibilities frontier and the opportunity cost of the goods related?

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

Which of the following is a listing of the types or categories of resources?

Figure 3-2 -In Figure 3-2,a point such as E

A well-functioning market will have high monetary costs applied to high opportunity costs.

Why is it inefficient for an economy to be inside the production possibilities frontier?

Firms are encouraged by the profit motive to use inputs efficiently.

Which of the following does not determine the position and shape of a society's PPF?

Money costs and opportunity costs are concepts that are

Although specialization of labor increases efficiency of production,it can lead to another major problem:

What is the basic task that economists expect the market to carry out?

Suppose a presidential candidate campaigns on the need to improve U.S.infrastructure,a term for capital goods like bridges,highways,and technology (much of it publicly owned).Which would lead to faster growth: government expenditure on capital goods or expenditure on consumption goods such as sports stadiums? Illustrate your answer,drawing appropriate production possibilities frontiers accompanied by an explanation.

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