1. False. Economics is the study of how people deal with scarcity.
2. False. Because wants are unlimited but resources are not, scarcity is a characteristic of all economies.
3. True. The opportunity cost of a choice is the value of the forgone alternative that was not chosen.
4. False. Gains from trade can also occur within organizations.
5. False. The United States will still produce one of the goods with relatively less resources than Canada, leading to a comparative advantage in that good.
6. True. International trade occurs when individuals who live in different countries trade with each other.
7. False. Production possibilities represent the alternative choices of goods that the economy can produce.
8. True. As more of one good is produced, less of the other can be produced.
9. False. The production possibilities curve is bowed out.
10. True. They represent the maximum amount that can be produced with available resources.
11. True. Using the same resources, the economy could produce more of both goods.
12. False. A command economy is also called a centrally planned economy.
13. True. They are making the transition from command economies to market economies.
14. False. Freely determined prices and property rights are characteristics of market, not centrally planned, economies.
15. False. One reason why organizations are created is to reduce market transaction costs.