Ch1 Practice

Ch1 Practice - Ch.1 Practice 1 a What are the three central...

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Ch.1 Practice 1. a. What are the three central coordination problems any economy must solve? The three central coordination problems any economy must solve are what to produce, how to produce it, and for whom to produce it. 2. What is scarcity? Is scarcity an issue faced by only poor people and poor nations, or do the rich and poor alike face scarcity? The textbook author defines scarcity as a situation in which the goods available are too few to satisfy individuals' desires. In other words, scarcity exists when we are unable to have as much as we would like. Even the rich are faced with scarcity if they are unable to have as much as they would like. So scarcity faces virtually all individuals and certainly all nations whether they are rich or poor. 3. What is the opportunity cost to the United States when the U.S. government increases spending on National Parks by $3 billion? According to the economic decision rule, under what circumstances would this additional spending be worth it? An opportunity cost is what must be given up in order to get something else. The
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This note was uploaded on 03/19/2008 for the course ECON 2302 taught by Professor Andron during the Spring '06 term at Austin CC.

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Ch1 Practice - Ch.1 Practice 1 a What are the three central...

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