Chapter 3: A Fundamental Economic Problem: Scarcity and Choice - Vocab

Question 1

Define resources

Answer 1

Instruments provided by nature and people.

Question 2

Define optimal decision

Answer 2

A decision that best serves the objectives of the decision maker.

Question 3

Define the Production Possibilities Frontier

Answer 3

A curve that shows the maximum quantities of outputs it is possible to produce with the available resource quantities and the current state of technologicalknowledge.

Question 4

Define efficiency

Answer 4

A set of outputs is said to be produced efficiently if there is no way to produce more without larger input amounts or the sacrifice of other outputs.

Question 5

Define allocation of resources

Answer 5

Refers to a societies decion on how to decide scarce infput resources among different outputs.

Question 6

Define allocation of resources

Answer 6

Refers to a societies decision on how to decide scarce input resources among different outputs.

Question 7

Define comparative advantage

Answer 7

One has a comparitive advantage over others if they can produce a paticular output more efficiently that the others.

Question 8

Define market system

Answer 8

A form of economic system in which resource allocation is left to consumers and producers to decide.