CHP 1: PRODUCTION POSSIBILITIES CURVE (PPC)

What is the production possibilities curve?

• a graph that shows how much an economy can produce between 2 goods
• how much money something is
• the opportunity one has to give up in order to gain something else
• land, labor, capital, entrepreneurs

What does point Y represent on the PPC?

• Efficiency
• Unattainable / impossible
• Inefficency
• Nothing

What does point B represent?

• Production at greater than the country's minimum potential
• Production is less than the country's minimum potential
• Productive inefficiency
• Productive efficiency

Which point represents "resources are not being used efficiently, or resources are being wasted or idle"?

• Point A
• Point Y
• Point X
• All of the above

In the following graph, PPC of country XYZ is currently at the blue line. Which of the following is best describes PPC (the blue line) shifts outwards.

• People from country ABC moved to country XYZ

• Climate changes has caused the production to decrease

• There is huge drop in country XYZ's economy growth

• There are technological advancements in the production of country ABC

Based on the table, calculate the opportunity cost of producing 20 000 units automobiles.

• 50000

• 40000

• 5000

• 4000

Based on the table, calculate the opportunity cost of producing 26 000 units computers.

• 50000

• 10000

• 5000

• 4000

Based on the table, calculate the opportunity cost of when the production of automobiles increases from 30 000 units to 50 000 units.

• 50 000

• 10 000

• 22 000

• 23 000

In the following graph, PPC of country XYZ is currently at the blue line. Suggest one way in which this production combination can increased

• Technology increase in both production

• Decrease in population

• There is huge drop in country XYZ's economy growth

• Natural disaster in country XYZ

Based on the diagram, identify the shape of PPC?

• Concave because Increasing opportunity cost

• Convex because decreasing opportunity cost

• Linear because constant opportunity cost

• Horizon because decreasing opportunity cost