Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Table 3-1 Suppose a farmer is currently producing 50 bushels of corn and 10 bushels of peanuts. According to Table 3-1, the opportunity cost of 10 additional bushels of peanuts is

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

Opportunity cost can always be measured in money terms.

Which of the following must cope with scarcity?

A decrease in the unemployment rate will shift the production possibilities frontier outward from the origin.

Increasing opportunity cost tends to occur if

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

Economics is generally concerned with

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.

In a market economy, opportunity costs are always synonymous with explicit monetary costs.

If an economy wants to experience economic growth, what decision must it make and carry out? Explain.

List the three coordination decisions made by every economy.

Do markets solve all of society's problems?

The principle of comparative advantage was first explained by David Ricardo in the early 1800s.

An economy that is producing inside its production possibilities frontier can be efficient.

Although finished goods are scarce, the inputs to produce them are not scarce.

Economists define "efficiency" as the absence of waste.

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

Which of the following is a good example of efficient specialization and voluntary exchange?

Probably the most important source of efficiency in production is