Exam 3: The Fundamental Economic Problem: Scarcity and Choice

If the PPF for guns and butter is bowed outward from the origin,this indicates constant opportunity cost between the two goods.

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

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

Which of the following is not an example of a type of factor of production?

At various time,the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared,citing huge job losses if they close.How can one rationally decide which bases to shut down,given the necessity of jobs?

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

Market economies are not constrained by scarcity; only planned economies have that problem.

What determines the position and shape of a society's production possibilities frontier?

A society's decision to produce more tanks may require it to forgo production of some cars.

If an economy is producing inefficiently,it is

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 her recommendation?

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.

A market system (market economy)depends on the market to

Economic growth solves the problem of scarcity.

If a farmer's opportunity cost of producing 50,000 bushels of wheat is 20,000 fewer bushels of soybeans,then her opportunity cost of producing 50,000 bushels of soybeans must also be 20,000 fewer bushels of wheat.

Only a market economy must answer the questions of what goods to produce,how to produce them,and for whom to produce them.

Do all valuable items have price tags?

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?

If production involves decreasing opportunity cost,the production possibilities curve

Resources are used to create goods and services.