Production Possibilities Curve Quiz

The Production Possibilities Curve (PPC) shows the relationship between the production of two goods. What does a point inside the PPC represent?

• Efficient use of resources

• Inefficient use of resources

• Full employment of resources

• Maximum production of both goods

Which of the following statements about a point on the PPC is true?

• It represents a combination of goods that is unattainable with current resources.

• It shows the maximum efficiency of resource allocation.

• It represents under-utilization of resources.

• It shows inefficiency in production.

What does a point outside the PPC represent?

• An unattainable combination of goods given current resources

• Efficient use of all available resources

• An economy operating at its maximum production capacity

• A combination of goods that can be achieved with available resources

If the PPC is a straight line, what can we infer about the opportunity cost between the two goods?

• The opportunity cost is increasing as more of one good is produced.

• The opportunity cost is constant as more of one good is produced.

• The opportunity cost is decreasing as more of one good is produced.

• There is no opportunity cost between the two goods.

What effect would a technological advancement in the production of Good 1 have on the PPC?

• The PPC would shift outward along the axis of Good 1.

• The PPC would shift outward along the axis of Good 2.

• The PPC would remain the same.

• The PPC would shift inward along the axis of Good 1.

Which of the following would cause the PPC to shift to the right?

• A decrease in available resources.

• An increase in technological advancements.

• A reduction in labour force size.

• A higher level of unemployment.

Which of the following best describes the shape of a PPC that reflects increasing opportunity costs?

• A straight, upward sloping line

• A straight, downward sloping line

• A concave curve

• A convex curve

What happens to the PPC if there is a permanent decrease in the labor force?

• The curve will shift outward.

• The curve will shift inward.

• The curve will become steeper.

• The curve will become flatter.

If an economy is producing at a point on the PPC, what is true?

• The economy can produce more of one good without sacrificing the other.

• The economy is not using all of its available resources.

• The economy is allocating resources efficiently.

• The economy is experiencing an economic recession.

Which of the following can be depicted by a shift from PPC1 to PPC2 to the left in the graph?

• An increase in available resources

• A decrease in available resources

• A reduction in technological advancement

• A reduction in unemployment