Chapter 3—Scarcity, Trade-Offs and Economic Growth

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Chapter 3—Scarcity, Trade-Offs and Economic Growth TRUE/FALSE 1. In a market economy, government officials make most production decisions in a centralized manner. ANS: F PTS: 1 2. Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced. ANS: T PTS: 1 3. In a market economy, prices help determine the distribution of goods and services but not the allocation of resources. ANS: F PTS: 1 4. An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve. ANS: T PTS: 1 5. Capital-intensive production techniques tend to be utilized most commonly…show more content…
|both a. and b. above | ANS: E PTS: 1 2. A market economy answers the question “how” will goods be produced by focusing on |a. |dollar votes. | |b. |consumer sovereignty. | |c. |least-cost method of production. | |d. |who can afford these goods. | |e. |both a. and b. above | ANS: C PTS: 1 3. Which of the following is not a question that scarcity forces all societies to answer? |a. |Which goods and services are to be produced? | |b. |How are goods and services to be produced? | |c. |Who will get the goods and services produced? | |d. |How can scarcity be
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