Production Possibilities Curve Review

The video tutorial introduces the production possibilities curve, a fundamental concept in economics that illustrates the potential production prospects for two products. It explains key concepts such as scarcity, trade-offs, opportunity cost, and efficiency using examples of hats and videos. The tutorial also covers how to calculate opportunity cost and discusses the difference between constant and increasing opportunity costs, using examples of corn, wheat, cactus, and pineapples.

What does the Production Possibilities Curve (PPC) represent?

• The potential production combinations of two products.

• The resources required for production.

• The maximum production of a single product.

• The cost of producing one product.

Which concept is demonstrated by the inability to produce beyond the PPC?

• Opportunity cost

• Efficiency

• Scarcity

• Trade-offs

What does a point inside the PPC indicate?

• Increasing opportunity cost

• Maximum efficiency

• Inefficiency

• Constant opportunity cost

What is the opportunity cost when moving from combination A to D?

• 15 hats

• 3 videos

• 4 hats

• 2 videos

What does a straight line PPC indicate about opportunity costs?

• Constant opportunity costs

• Decreasing opportunity costs

• Variable opportunity costs

• Increasing opportunity costs

Why does the PPC bow outward when considering cactus and pineapples?

• Resources are equally suited for both goods.

• Resources are better suited for one good over the other.

• There is no opportunity cost.

• The production of one good does not affect the other.

What happens to opportunity cost as more of a good is produced, according to the law of increasing opportunity cost?

• It becomes zero.

• It remains constant.

• It increases.

• It decreases.