Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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

During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain.If not, indicate which economic idea it violated.

A large government faces a production possibilities frontier much like a business firm does.

The divergence between money costs and opportunity costs will be greatest in which of the following situations?

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

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

The principle of comparative advantage explains specialization and trade among countries but not among individuals.

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

Voluntary exchange results in mutual gains.

One popular definition of economics is the study of

​Goods are distributed among people by means of:

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

All actions and purchases, even those of wealthy people, involve a sacrifice.

Division of labor has caused output to rise dramatically since the industrial revolution.

The negative slope of a production possibilities frontier is a graphic representation of opportunity cost.

The problem of scarcity

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?

A student has a chance to see Katy Perry in concert.The student also has a major economics exam in the morning.If the student goes to the concert,

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

If good "A" is represented on the horizontal axis and good "B" on the vertical axis, then the steeper the production possibilities frontier at a given level of production of good "A," the