Econ-2.2- Formative Assessment Option 1

PPC Model & Opportunity Costs

When societies decide to change their production combinations
(move from 1 production point to the next) the society will gain a
certain amount of one good/service.

But, in order to gain that amount of a good, they must give up
the opportunity to produce a certain amount of the other good
b/c some of the resources that were used to produce one good
are now going to producing the other goods.
The amount of that good lost is the OPPORTUNITY COST

The bottom 2 rows on the table above show the amount of the
opportunity cost when this society decides to move from one
production point to the next.

F

Production Points
A

B

C

D

E

Bikes

14

12

9

5

0

Computers

0

2

4

6

8

Opportunity Cost

A to B

B to C

C to D

D to E

2 Bikes

3 Bikes

4 Bikes

5 Bikes

Dropdown

The PPC Model show the maximum amount of ​

Select answer

goods and services an economy/society can produce with a fixed amount of resources.

Open Ended

Rewrite this FALSE statement to make it a TRUE statement:

Eventhough factors of production are scarce, we can still use them to produce an infinite amount of final goods and services.

Draw

Based on the PPC given in this question, put a dot on a production point that would be considered an inefficient production. LABEL THIS PRODUCTION POINT "I".

Draw

Based on the PPC given in this question, put a dot on a production point that would be considered currently unattainable. LABEL THIS PRODUCTION POINT "U".

Dropdown

Based on the PPC given in this question, Calculate the opportunity cost of a movement between production point A to production point B.

The opporunity cost of moving from production point A to production point B is ​

Select answer

Dropdown

Based on the PPC given in this question, Calculate the opportunity cost of a movement between production point B to production point C.

The opporunity cost of moving from production point B to production point C is ​

Select answer

Dropdown

Based on the PPC given in this question, Calculate the opportunity cost of a movement between production point D to production point C.

The opporunity cost of moving from production point D to production point C is ​

Select answer

Multiple Choice

Identify the correct change in the PPC Model based on the following scenario:

Widgets, a key resource in the production of Good X, has increased in abundance.

Multiple Choice

Identify the correct change in the PPC Model based on the following scenario:

This society has lost 400 square miles of land as a result of loosing a war with a bordering country.

Multiple Choice

Which of the following is the proper definition of the term, "Inefficient Production Point"?

• A specific combination of goods or services that either can be produced now or in the future when more resources or technology is available.​

• A combination of goods for which currently available resources cannot produce.

• A combination of goods for which currently available resources allow an increase in the production because the available resources and technology are not being used efficiently.

• A combination of goods for which currently available resources do not allow an increase in the production of one good without a reduction in the production of the other because the available resources and technology are being used as efficiently as possible.

Multiple Choice

What does a point on the Production Possibilities Curve indicate?

• Unrealistic production

• Resources surplus

• Efficient use of resources

• Resources scarcity

Multiple Choice

Which situation can cause a shift outwards in a Production Possibilities Curve?

• Increase in demand

• Scarcity of resources

• Increase in resources

• Decrease in economic activity

Multiple Choice

Which of the following PPC models shows the impact of the following change:

A study finds that there are fewer workers specifically trained in the production of parts that go into an aircraft carrier and similar large vessels.

Multiple Choice

Based on the PPC model given, the opportunity cost of increasing production from 4 to 7 boats is _____?

• 1 boat

• 2 boats

• 3 boats

• 4 boats