On a production possibilities frontier diagram, where are production points that have tradeoffs? Where are production points with a free lunch?
What will be an ideal response?
A tradeoff is a situation in which a limit forces one thing to be given up in exchange for something else. Any point on the production possibilities frontier itself is a production point with a tradeoff. Why? Moving along the production possibilities frontier means that more of one good can be obtained only at the (opportunity) cost of giving up some other good, which means that there is a tradeoff. A free lunch is the absence of a tradeoff, that is, when the production of a good or service can be increased without decreasing the production of another good or service. A free lunch occurs at any point within the production possibilities frontier. At these points, resources are being used inefficiently. By utilizing the resource efficiently, more goods or services can be produced without giving up any other goods or services.
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Scarcity refers to the situation in which
A) unlimited wants exceed limited resources. B) a country's population is larger than its resource base. C) a nation's poverty level increases faster than its population. D) unlimited resources exceed limited wants.
International trade was not important to the industrializing U.S. since it was relatively rich in raw materials and land
Indicate whether the statement is true or false