What does the production possibilities curve (PPC) illustrate in economics?

• The relationship between supply and demand

• The concept of diminishing returns

• Choice, opportunity cost, and unemployment of resources

• The law of comparative advantage

Which of the following best describes the difference illustrated by the two production possibilities curves in Figure 1.2?

• The difference between supply and demand

• The difference between constant and increasing opportunity costs

• The difference between short-run and long-run production

• The difference between fixed and variable costs

According to the TIP under Figure 1.1, what should students be able to illustrate using the production possibilities curve?

• The effects of inflation on prices

• The impact of government intervention

• Choice, opportunity cost, and unemployment of resources

• The process of economic growth

What is the main focus of the diagrams included in the IB Economics syllabus, as described in the introduction?

• To show historical economic trends

• To illustrate key concepts required for IB exams

• To provide examples of famous economists

• To explain government policies

Which of the following best describes economic growth as an increase in actual output?

• An increase in production possibilities caused by improvements in resource quality

• An increase in actual output caused by reductions in unemployment and inefficiency in production

• A decrease in production possibilities due to resource depletion

• A non-parallel shift of the production possibilities curve

What does a rightward shift of the production possibilities curve (PPC) indicate?

• Economic decline due to resource loss

• Economic growth as an increase in production possibilities

• A decrease in actual output

• Non-parallel shifts of the PPC

Which of the following is shown by a decrease in production possibilities on a PPC diagram?

• Economic growth

• Increase in resource quality

• Decrease in production possibilities

• Increase in actual output

In the circular flow of income model, which of the following is considered a leakage?

• Investment

• Government spending

• Saving

• Consumer expenditure

What does the circular flow of income model illustrate about the relationship between households and firms?

• Households only provide goods to firms

• Firms only provide services to households

• There is interdependence between households and firms through the flow of income and expenditure

• Households and firms operate independently of each other

What is a movement along the demand curve, caused by a change in price, called?

• Change in quantity demanded

• Change in demand

• Change in supply

• Change in quantity supplied