TRIAL

What does a Production Possibilities Curve (PPC) represent?

• The maximum profit a company can achieve.

• The different combinations of two goods that can be produced using full employment of resources.

• The total demand for a product in a market.

• The relationship between supply and price of a single good.

On a Production Possibilities Curve, what does a point located inside the curve signify?

• Efficient production.

• Impossible production given current resources.

• Inefficient production or underutilization of resources.

• Economic growth.

What does a point located outside the Production Possibilities Curve indicate?

• The economy is operating at full efficiency.

• The economy has unused resources.

• The production level is currently unattainable with existing resources.

• There has been a technological advancement.

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Using the provided table, what is the opportunity cost of increasing video production from 1 video (point B) to 2 videos (point C)?

• 1 hat

• 4 hats

• 10 hats

• 15 hats

What does a straight-line Production Possibilities Curve indicate about opportunity cost?

• Increasing opportunity cost.

• Decreasing opportunity cost.

• Constant opportunity cost.

• Zero opportunity cost.