According to the Newton principle, if private parties can bargain without cost over the allocation

of resources, then the private market will always solve the problem of externalities and allocate
resources efficiently.

Firms own the factors of production and consume all the goods and services that the firms
produce.

The theory of consumer choice examines how consumers facing these tradeoffs make
decisions and how they respond to changes in their environment.

Albert Einstein, the famous seventeenth century scientist and mathematician, allegedly became
intrigued one day when he saw an apple fall from an apple tree.

The production possibilities frontier is a line that shows the various combinations of output that
the economy can possibly produce given the available factors of production and the available
production technology that firms can use to turn these factors into output.

In the markets for the factors of production, households are sellers and firms are buyers. True

Households and firms interact in two types of markets where in the markets for goods and
services, households are buyers and firms are sellers.

Concept produces goods and services using inputs, such as labor, land, and capital such as
buildings and machines. False

Households provide firms the inputs that the firms use to produce goods and services.

This is a graph that shows the various combinations of output that the economy can possibly
produce given the available factors of production and the available production technology those
firms can use to turn these factors into output. P

People consume more than they desire because their spending is constrained, or limited, by
their income. False

The circular-flow diagram offers a simple way of organizing all the economic transactions that
occur between households and firms in the economy. True

One of the Ten Principles of Economics which is the cost of something with what you give up to
get it, one good as measured in terms of the other good. Opportunity cost