Chapter 2.

The fundamental question(s) every society asks/answers are

Which fundamental economic question requires society to choose the combination (mix) of resources (factors of productions) in order to produce goods & services?

The opportunity cost of making a decision (by an individual or a society) is:

The opportunity cost of an action taken by an individual/society is:

From an economic standpoint, government intervention is justified:

If an economy is operating at a point inside the production possibilities curve,

Economic growth may be represented by a(n):

A point outside the production possibilities curve represents a combination of goods that is:

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 10 consumption/consumer goods (more consumer goods as compared to economy B) and 5 capital/producer/industrial goods, while economy B also chooses an efficient point, but with 6 consumption/consumer goods and 9 capital/producer/industrial goods. In the future we can predict:

Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?

If an economy keeps increasing its capital stock/number of workers/technology/natural resources, then over time its production possibilities curve will:

Any point on the production possibilities curve illustrates:

A production possibilities curve (PPC) or production possibilities frontier (PPF) shows the various:

Using the above Figure, suppose point "C" represents the optimal mix of output for a society. If market forces cause society to produce at point "D", then, the society may allow the government to intervene in the economy; and such a government intervention;