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Chapter 2: Problem 1

Which of the following decisions must be made by all economies? a. How much to produce? When to produce? How much does it cost? b. What is the price? Who will produce it? Who will consume it? c. What to produce? How to produce it? For whom to produce? d. None of the above.

Short Answer

Expert verified
How to produce it? For whom to produce? These questions directly correspond to the three fundamental economic questions every society must answer in order to allocate resources efficiently and effectively.

Step by step solution

01

To properly approach this task, we need to have a basic understanding of economics. Economics is the study of how societies, governments, businesses, and individuals allocate their scarce resources. In other words, economies aim to answer a series of basic questions in order to allocate their resources efficiently and effectively. #Step 2: Identify the fundamental economic questions#

It's crucial to know the three fundamental economic questions that every society must answer, which are: What goods and services should be produced? How should goods and services be produced? And for whom should goods and services be produced? These questions arise from the fundamental problem of scarcity, forcing every economy to make choices. #Step 3: Compare options with fundamental economic questions#
02

Now that we're familiar with fundamental economic questions, let's compare each option given in the exercise with these questions: a. How much to produce? When to produce? How much does it cost? b. What is the price? Who will produce it? Who will consume it? c. What to produce? How to produce it? For whom to produce? d. None of the above. Option (a) and (b) only partially address the fundamental economic questions, while option (c) directly corresponds to the three fundamental questions: - What to produce? (What goods and services should be produced?) - How to produce it? (How should goods and services be produced?) - For whom to produce? (For whom should goods and services be produced?) #Step 4: Choose the correct answer#

Since option (c) completely aligns with the three fundamental economic questions all economies must answer, the correct choice is: c. What to produce? How to produce it? For whom to produce?

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Most popular questions from this chapter

Opportunity cost is the a. purchase price of a good or service. b. value of leisure time plus out-of-pocket costs. c. best option given up as a result of choosing an alternative. d. undesirable sacrifice required to purchase a good.

On a production possibilities curve, the opportunity cost of good \(X\) in terms of good \(Y\) is represented by a. the distance to the curve from the vertical axis. b. the distance to the curve from the horizontal axis. c. the movement along the curve. d. all of the above.

Using a production possibilities curve, unemployment is represented by a point located a. near the middle of the curve. b. at the top corner of the curve. c. at the bottom corner of the curve. d. outside the curve. e. inside the curve.

If a farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from \(\$ 80\) to \(\$ 100\) per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than a. \(\$ 12.50\) per pound. b. \(\$ 20\) per pound. c. \(\$ 80\) per pound. d. \(\$ 100\) per pound.

A nation can accelerate its economic growth by a. reducing the number of immigrants allowed into the country. b. adding to its stock of capital. c. printing more money. d. imposing tariffs and quotas on imported goods.
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