2.2 Production Possibilities Frontier

The resources in the economy are not all perfectly adaptable to the production of both consumer and capital goods.

• True
• False

Changes in technology do not usually affect production

• True
• False

The law of increasing opportunity cost states that each additional increment of one good requires the economy to give up successively larger increments of the other good.

• True
• False

Producing more capital goods during a particular period is likely to shift the economy's PPF outward the next period.

• True
• False

Movement down the PPF curve indicates that the opportunity cost of more capital goods is producing more consumer goods

• True
• False

Efficiency is producing the maximum possible output from available resources

• True
• False

If many workers decide to retire at an early age, the PPF would shift inward.

• True
• False

What do points outside of the PPF indicate?

• Unattainable combinations of goods
• Ideal combinations of goods
• Inefficient combinations of goods

Economic growth affects the PPF by...

• Shifting inward
• Shifting outward
• causing no change at all
• turning it into a straight line

Which of the following is NOT one of the PPF model's assumptions?

• The model focuses on production during a given time period
• The resources available are fixed in quantity and quality
• The model focuses only on consumer goods
• Available technology does not change during a given time period