The production possibilities curve tells us
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
  • the combinations of two goods that can be produced with society's available resources
  • assuming competition, private and public interests will coincide.
  • the amount of one product that must be given up to produce one more unit of another product
The market system is characterized by:
  • benefit exceeds its marginal cost.
  • Goods and services that are profitable
  • "Using the least-cost production techniques."
  • private property rights
Opportunity cost is best defined as:
  • if the marginal benefit of the movie exceeds its marginal cost
  • the combinations of two goods that can be produced with society's available resources
  • the amount of one product that must be given up to produce one more unit of another product
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
Rational behavior implies that everyone will make identical choices
  • True
  • False
The "coincidence of wants" problem associated with barter refers to the fact that:
  • for exchange to occur each seller must have a product that some buyer wants
  • the combinations of two goods that can be produced with society's available resources
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
  • "Through the guiding function of prices and the incentive function of profits."
The invisible hand concept suggests that:
  • assuming competition, private and public interests will coincide.
  • attainable, but the economy is inefficient
  • the combinations of two goods that can be produced with society's available resources
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
In economics, the pleasure, happiness, or satisfaction received from a product is called:
  • "Using the least-cost production techniques."
  • is a possible explanation of cause and effect.
  • utility
  • False
Human specialization, or the division of labor:
  • the combinations of two goods that can be produced with society's available resources
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
  • households are on the selling side of the resource market and on the buying side of the product market.s and services
  • increases output by enabling workers to take advantage of differences in their skills
You should decide to go to a movie:
  • the combinations of two goods that can be produced with society's available resources
  • . independently acting buyers and sellers and freedom
  • if the marginal benefit of the movie exceeds its marginal cost
  • the amount of one product that must be given up to produce one more unit of another product
An economic hypothesis:
  • attainable, but the economy is inefficient
  • if the marginal benefit of the movie exceeds its marginal cost
  • is a possible explanation of cause and effect.
  • "Using the least-cost production techniques."
The market system's answer to the fundamental question "How will the system accommodate change?" is essentially:
  • "Through the guiding function of prices and the incentive function of profits."
  • "Using the least-cost production techniques."
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
  • for exchange to occur each seller must have a product that some buyer wants
The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially:
  • "Using the least-cost production techniques."
  • assuming competition, private and public interests will coincide.
  • for exchange to occur each seller must have a product that some buyer wants
  • "Through the guiding function of prices and the incentive function of profits."
The simple circular flow diagram shows that:
  • buyers determine what will be produced based on their "dollar votes" for the goods and services offered by sellers.
  • all production involves the use of scarce resources and thus the sacrifice of alternative goods
  • households are on the selling side of the resource market and on the buying side of the product market.s and services
  • the combinations of two goods that can be produced with society's available resources
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