Ch2 Econ

A straight-line production possibilities curve has

a constant opportunity cost between the two goods.

The production possibilities curve can shift inward when

a country experiences a natural disaster.

A country operates inside its production possibilities curve; this may be caused by

unemployed resources.

Which of the following is the best example of scarcity? A)Fred only gets a 10-hour lunch break and each day must decide between working out at the gym or socializing with his colleagues. B)There is a bumper crop of strawberries, and stores have more berries than they can sell. C)The local market's buy-one-get-one-free sale on strawberries results in more people wanting the berries than producers are able and willing to supply. D)The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to purchase the limited number of available Teddies.

A: Fred only gets a 10-hour lunch break and each day must decide between working out at the gym or socializing with his colleagues.

A point outside a production possibilities curve indicates

an output combination that society cannot attain given its current level of resources and technology.

Scarcity arises because

resources are finite and are inadequate to meet all human wants.

All points inside the production possibilities curve indicate

inefficiency in production.

The opportunity cost of going to college for a student receiving a scholarship

is the income that she would have earned if she did not go to college.

The value of the best alternative sacrificed to obtain something you want is referred to as

opportunity cost

The saying that "You cannot have your cake and eat it too" illustrates the economic concept of

opportunity cost.

If a country wants to promote future growth, it should

produce more capital goods today.

A student has a job that pays a wage rate of $10 per hour. The night before an economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost for her work is

the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours.

The law of increasing additional cost is due to

the fact that resources are not perfectly adaptable for alternative uses.

The reason the production possibilities curve is bowed outward (concave) is

the law of increasing additional cost.

If a country increased the production of its capital goods, then

the less consumption we can have today, but we will have more in the future.

One of the assumptions underlying the production possibilities curve is that

the quantity of the resources available for the production of economic goods is fixed over a given time period.

The problem of economic scarcity applies

to the economies of all nations, regardless of their level of development.