Understanding the Production Possibilities Curve

What is represented by a point inside the PPC?

• Unattainable production

• Maximum efficiency

• Constant opportunity cost

• Inefficiency

How is opportunity cost calculated from the PPC?

• By the quantity of goods produced

• By the resources saved

• By the quantity of one good given up to produce another good

• By the profit made from selling goods

Why are the resources for producing corn and wheat considered similar?

• Because they are both fruits

• Because they use similar ground and climate conditions

• Because they can be grown in any climate

• Because they require the same amount of water

What does a straight line PPC indicate?

• Decreasing opportunity cost

• No opportunity cost

• Increasing opportunity cost

• Constant opportunity cost

What does a bowed-out PPC indicate?

• Constant opportunity cost

• No opportunity cost

• Increasing opportunity cost

• Decreasing opportunity cost

What is the law of increasing opportunity cost?

• As production increases, costs decrease

• As production of one good increases, the opportunity cost to produce an additional unit also increases

• Opportunity costs remain constant regardless of production levels

• As production decreases, the opportunity cost increases