Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Carefully define the following terms and explain their importance to the study of economics. a.resources b.rational decision c.scarcity d.opportunity cost

The principle of comparative advantage helps explain trade between nations.

Karl Marx was critical of markets on the grounds that they are not efficient.

Figure 3-1 -The shape of the production possibilities frontier in Figure 3-1 implies that

Which of the following events create an outward shift of the production possibilities curve?

According to Baumol and Blinder,recognition of the usefulness of markets

If you discover that the opportunity cost of raising your economics grade is zero,you

In a market economy,government decides the answers to the three economic decisions.

In terms of the production possibilities diagram,the principle of increasing cost simply asserts that the frontier is

Inefficiency in an economy can be caused by

If Japan and the United States engage in trade,and Japan gains as a result of the trade,does that mean the United States has lost in some manner?

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

In early 1996,the upper Midwest suffered record cold,with wind chills of fifty degrees below zero or worse.Yet,grocery stores stocked fresh citrus fruit (obviously not grown locally).Why did grocers stock the fruit?

According to the principle of increasing costs,as the production of one good expands,the opportunity cost of producing another unit of the good tends to increase.

Economists define "efficiency" as the absence of waste.

Opportunity costs exist for

As the term "opportunity cost" is defined in the text,the opportunity cost of going to college includes

What mechanism assures that producers use inputs efficiently?

Economics examines the options open to households,business firms,governments,and entire societies by the limited resources at their command.

Since it spent over $3.6 trillion in 2010,opportunity cost was not an issue for the U.S.government.