Production Possibility Curve Quiz

The diagram shows a production possibility curve (PPC) for an economy that can produce cotton and cars. The economy is at point Q. There is improved technology that can be used in the production of cars. How would this be shown on the diagram?

• by a movement from Q to W

• by a movement from Q to X

• by a movement from Q to Y

• by a movement from Q to Z

A country's infrastructure was damaged by a natural disaster. Before the disaster, the country was producing at point Y on the production possibility curve (PPC). Which point represents the country's production immediately after the disaster?

• A

• B

• C

• D

The diagram shows a production possibility curve (PPC). Which of these points shows the largest possible output of product Y currently achievable?

• A

• B

• C

• D

The diagram shows a production possibility curve (PPC). Why is the curve usually drawn like this?

• International free trade exists.

• Opportunity cost changes.

• Resources are unlimited in supply.

• Some resources will be unemployed.

The diagram shows a production possibility curve (PPC) for an economy that produces both capital goods and consumer goods. At which point will the economy show the highest potential for sustained long run economic growth?

• A

• B

• C

• D