Exam 3: The Fundamental Economic Problem: Scarcity and Choice

The tendency of opportunity cost to increase as production increases

Scarcity is only a temporary problem that a society can solve by promoting economic growth.

Opportunity cost is the value of the next best alternative that is given up.

In a centrally planned economy, resources are allocated primarily in accordance with directives from government agencies.

-Figure 3-7 What is the opportunity cost of moving from point B to point A in Figure 3-7?

Which of the following quotations best captures the idea of opportunity cost?

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

An optimal decision is one that chooses

Goods are distributed among people by means of

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

Opportunity cost cannot be measured in money terms, only in conceptual terms.

A market economy allocates resources primarily in accordance with orders from government bureaucrats.

The money cost of a particular good will approximate its opportunity cost if

Free markets can

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

In the Wealth of Nations , Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

-From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

The division of labor can benefit society only if

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

The problem of scarcity