Question 1

Given its size,the United States does not have to worry about limitations on resources.

Accepted Answer

While the United States is a large country, it still has limitations on resources such as water, oil, and natural gas. Overuse and mismanagement of these resources can lead to shortages and environmental damage.

Question 2

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Accepted Answer

This is the correct definition of opportunity cost.

Question 3

Millionaires do not face the problem of scarcity.

Accepted Answer

While millionaires may have more resources than the average person, they still face constraints and choices about how to allocate those resources. They may not have to worry about basic needs like food and shelter, but they still face limits on things like time, attention, and money. Additionally, the concept of opportunity cost means that even millionaires have to make trade-offs and sacrifices when choosing one use of their resources over another.

Question 4

If the budget deficit was eliminated,the federal government would have more money than it could spend.

Accepted Answer

If the budget deficit was eliminated, it would mean that the government is not spending more than it is taking in, which is a positive step towards financial stability. However, this does not mean that the government would have more money than it could spend. There are always competing demands for government spending, and even if the budget deficit is eliminated, there would still be limits on how much the government could spend on various programs and initiatives.

Question 5

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

Accepted Answer

Economics does not ignore the options of governments and entire societies. In fact, economics includes the study of government policies and their impact on the economy, as well as how societies make collective decisions to allocate resources.

Question 6

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

Accepted Answer

Economics is the study of how people allocate scarce resources to fulfill their unlimited wants and needs. It examines the decisions made by individuals, firms, governments, and societies in order to make the most efficient use of the limited resources available to them.

Question 7

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

The answer of Market economies are not constrained by scarcity;...

Question 8

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

Accepted Answer

This definition accurately describes the concept of opportunity cost.

Question 9

An optimal decision is one that chooses the most desirable from among all possibilities that are available.

Accepted Answer

An optimal decision selects the best option from all available options.

Question 10

Money is scarce,but resources are not.

Accepted Answer

Resources can also be scarce, such as when there is a drought or a shortage of a certain material. However, in some cases, resources may be abundant but not fully utilized due to factors such as lack of technology or knowledge.

Question 11

Scarcity is the fundamental problem of the economy.

Accepted Answer

Scarcity is the basic economic problem that arises because resources are limited and wants are unlimited.

Question 12

Rational decision making must always be based on the concept of opportunity cost.

Accepted Answer

Rational decision making involves weighing the benefits and costs of various options. Opportunity cost refers to the benefits forgone by choosing one option over another. It is an essential concept in rational decision making because it ensures that all possible options are considered, and the one chosen provides the greatest benefit.

Question 13

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

Accepted Answer

This statement is true as every action and purchase requires giving up something, whether it be money, time, or other resources. Even wealthy people have to sacrifice something in order to make a purchase or take an action.

Question 14

The scarcity of physical resources is far more fundamental to the study of economics than the scarcity of funds.

Accepted Answer

Physical resources, such as natural resources and labor, are essential to production and consumption. Without them, economic activity cannot occur, regardless of the availability of funds or money. Therefore, the scarcity of physical resources is more fundamental to the study of economics than the scarcity of funds.

Question 15

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

Accepted Answer

Scarcity refers to the limited availability of resources relative to unlimited human wants and needs. This means that people must make choices about how to allocate those resources, which implies making decisions based on the means they have available to them.

Question 16

Inputs in production processes are called resources.

Accepted Answer

Inputs in production processes are referred to as resources, as they are the means by which production is accomplished. Examples of resources include raw materials, labor, and capital.

Question 17

Resources are used to create goods and services.

Accepted Answer

Resources such as labor, capital, and natural resources are used to produce goods and services.

Question 18

Centrally planned economies are not constrained by the problem of scarcity.

Accepted Answer

All economies, whether market-based or centrally planned, face the problem of scarcity - there are limited resources available to meet unlimited wants and needs. Centrally planned economies may have more control over the allocation of resources, but they still face scarcity and must make choices about how to use those resources efficiently.

Question 19

Goods that are actually produced by firms are not really limited in supply,because the firms can always produce more of them.

Accepted Answer

While firms can produce more goods, there are limitations such as availability of resources, cost of production, and capacity of production facilities. Therefore, there is a limit to the supply of goods.

Question 20

Economics studies the logic of choices made from among available possibilities.

Accepted Answer

This statement accurately describes the subject matter of economics. Economics is concerned with analyzing how people and societies make decisions about how to allocate their resources, given their limited availability.

Quiz 3: The Fundamental Economic Problem: Scarcity and Choice