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Production possibility curve

Total questions: 103

Worksheet time: 2hrs 4mins

Name
Class
Date
1.
Alternative name of Microeconomics is called
a)
Income Theory
b)
Employment Theory
c)
Price Theory
d)
Demand Theory
2.
Aggregate Demand is a tool of 
a)
Positive Economics
b)
Normative Economics
c)
Microeconomics
d)
Macroeconomics
3.
Which of the following statement is a part of Normative Economics?
a)
Prices in Indian economy are constantly rising
b)
India should take steps to control rising prices
c)
The population of India in 2011 census is 121 crores
d)
None of these
4.
How would the PPC of India be affected when there is inflow of Foreign Direct Investment in India?
a)
Shifts to the right
b)
Shifts to the left
c)
Rotates around X-axis
d)
None of these
5.

For whom to produce is related to

a)

What goods to be produced

b)

Technique of Production

c)

Distribution of Income

d)

None of these

6.
Government of India take efforts to reduce unemployment. How will it affect its PPC?
a)
PPC will shift rightward
b)
PPC will shift leftward
c)
PPC will not be affected
d)
None of these
7.
What will be the shape of a PPC when Marginal Opportunity cost along the PPC decreases?
a)
Straight Line
b)
Concave to the Origin
c)
Convex to the Origin
d)
None of these
8.
Central Problems in an economy arises due to 
a)
Scarcity of resources
b)
Unlimited human wants
c)
Alternative uses of resources
d)
All of these
9.
Production Possibility curve is also called
a)
Production Possibility Boundary
b)
Transformation Curve
c)
Production Possibility Frontier
d)
All of these
10.
A point inside the PPC indicates
a)
Full utilization of resources
b)
Efficient utilization of resources
c)
Unemployment
d)
Economic Growth
11.
If there is improved technique of Production in both the goods , how the PPC will be affected?
a)
Leftward shift of PPC
b)
Rightward shift of PPC
c)
Rotation of PPC
d)
None of these
12.
The problem of "What to Produce" is related to
a)
Choice of Goods to be produced
b)
Choice of technique of production
c)
Choice of group of Consumers
d)
None of these
13.
Unemployment is a study of 
a)
Microeconomics
b)
Macroeconomics
c)
Both Micro and Macro Economics
d)
None of these
14.
Which of the following is a Microeconomics variable?
a)
Aggregate Demand
b)
National Income
c)
Market Demand
d)
None of these
15.
Which of the followings is not an assumption of PPC?
a)
Resources in the economy are constant
b)
The economy produces only two goods
c)
There is no change in the technique of production
d)
Resources are equally efficient in production of both the goods
16.
Which economic problem will decide category of people who will consume the goods
a)
What to produce
b)
How to produce
c)
For whom to produce
d)
None of the above
17.
If the Marginal Rate of Transformation is constant , what will be the shape of the PPC?
a)
Straight Line
b)
Convex to the origin
c)
Concave to the origin
d)
Downward sloping from left to right
18.
An economy operates on the PPC when
a)
There is full & efficient utilization of resources
b)
Inefficient utilization of resources
c)
Creation of more Employment
d)
Inflow of FDI in to the economy
19.
Opportunity Cost is
a)
Number of units of a commodity sacrificed
b)
Value of the next best alternative activity forgone
c)
Number of units of a commodity gained
d)
None of these
20.
Which of the followings illustrates a decrease in the unemployment using the PPC?
a)
A downward movement along the PPC
b)
A rightward shift of PPC
c)
A movement from a point inside the PPC to a point on the PPC
d)
A movement from a point on the PPC towards a point inside the PPC
21.
What does this diagram implies if EF is the original PPC and AE is the new PPC?
a)
Improved Technology in the production of Consumer goods
b)
Improved Technology in the production of Capital goods
c)
Economic Growth
d)
Outdated technology in the production of Capital goods
22.
Less supply of a commodity in comparison to its demand is called
a)
Alternative uses of resources
b)
Scarcity of resources
c)
Unlimited Human wants
d)
None of these
23.
Govt. of India launched "Swachh Bharat Abhiyan". How will it affect the PPC of India?
a)
No effect on PPC
b)
PPC will shift leftward
c)
PPC will shift rightward
d)
PPC will rotate
24.
Govt. of India established large number of Institutes of Science and Technology. How will it affect the PPC of India?
a)
No effect on PPC
b)
Rightward shift of PPC
c)
Leftward shift of PPC
d)
None of these
25.
The problem of choice of technique of production is related to the central problems of
a)
What to Produce
b)
How to Produce
c)
For whom to Produce
d)
When to Produce
26.
Which of the followings is/are a quality of Resources
a)
They are unlimited
b)
They are Scarce
c)
They have no alternative uses
d)
they are not scarce
27.
Which of the following assumptions determines the shape of a PPC?
a)
The economy produces only two goods
b)
Resources are not equally efficient in producing both the goods
c)
Technique of production remain unchanged
d)
None of these
28.
Value Judgement is a study of
a)
Microeconomics
b)
Macroeconomics
c)
Positive Economics
d)
Normative Economics
29.
A PPC is downward sloping from left to right due to which of the following assumptions?
a)
The economy produces only two goods
b)
Resources are fixed
c)
There is no change in technique of production
d)
Resources are not equally efficient in producing both the goods
30.
There is widespread death of people due to Indo-Pak war. How will the PPC of India be affected?
a)
PPC will not be affected
b)
Rightward shift of PPC
c)
Leftward shift of PPC
d)
None of these
31.
What is the fundamental problem of every society?
a)
labor costs
b)
scarcity
c)
economic interdependence
d)
market fluctuation
32.

The table shows the production possibilities for a country. Based on the table, which of the following production combinations is a possibility?

a)

28 pizzas and 5 pairs of shoes

b)

3 pairs of shoes and 23 pizzas

c)

2 pairs of shoes and 20 pizzas

d)

4 pairs of shoes and 15 pizzas

33.
True or False: Everything that is scarce requires a choice, and these choices always involve a tradeoff.
a)
True
b)
False
34.
Based on the table, if the country is currently producing at point B and decides to produce at point C, the opportunity cost for the additional pair of shoes is ____ pizzas.   
a)
26
b)
23
c)
3
d)
2
35.
What is the production possibilities curve?
a)
a graph that shows how much an economy can produce between 2 goods
b)
how much money something is
c)
the opportunity one has to give up in order to gain something else
d)
land, labor, capital, entrepreneurs
36.
What is opportunity cost?
a)
a graph that shows how much an economy can produce between 2 goods
b)
how much money something is
c)
the opportunity one has to give up in order to gain something else
d)
land, labor, capital, entrepreneurs
37.
Land, Labor, Capital, and Entrepreneurship 
a)
Diversification
b)
Deductions
c)
Portfolio
d)
Factors of Production 
38.
The opportunity cost of increasing production from 7 to 9 trucks is
a)
Scarcity
b)
2 boats
c)
2 trucks
d)
3 boats
39.
The opportunity cost of increasing production from 4 to 7 boats is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 trucks
40.
Movement down the PPF curve indicates that the opportunity cost of more capital goods is producing more consumer goods
a)
True
b)
False
41.
Efficiency is producing the maximum possible output from available resources
a)
True
b)
False
42.
What do points inside the PPF indicate?
a)
The combination of goods that employ goods efficiently
b)
The combination of goods that employ resources fully
c)
The combination of goods that do not employ resources fully
43.
An increase in the labor force would cause the PPF to 
a)
Shift inward
b)
Shift outward
c)
Do nothing
d)
Turn into a straight line
44.
What does point Y represent on the PPC?
a)
Efficiency
b)
Unattainable / impossible
c)
Inefficency
d)
Nothing
45.
What does point B represent?
a)
Production at greater than the country's minimum potential
b)
Production is less than the country's minimum potential
c)
Productive inefficiency
d)
Productive efficiency
46.
Which point represents "resources are not being used efficiently, or resources are being wasted or idle"?
a)
Point A
b)
Point Y
c)
Point X
d)
All of the above
47.
Labor, human capital, entrepreneurship, natural resources, and capital are all examples of which of the following?
a)
Outputs
b)
Substitutes in Production
c)
Absolute Advantage
d)
Factors of Production
48.
The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?
a)
If Country Y is producing at point C, it is using all its resources efficiently
b)
The opportunity cost of producing more machines is constant
c)
Country Y cannot produce at point E
d)
The most efficient point of production is point D
49.

This graph shows potential costs of production when a company or country is efficiently using resources.

a)

Production possibilities curve

b)

trade offs

c)

specialization

d)

comparative advantage

50.

The opportunity cost of shifting production from "Point E" to "Point C" would be:

a)

30 cans of cola

b)

30 chocolate bars

c)

70 cans of soda

d)

20 chocolate bars

51.

The opportunity cost of increasing truck production from point B to point C is...

a)

can't have point E

b)

2 thousand boats

c)

2 thousand trucks

d)

3 thousand boats

52.

The opportunity cost of increasing production from point C to point A is...

a)

1 thousand boats

b)

2 thousand boats

c)

5 thousand trucks

d)

3 thousand trucks

53.

If a natural disaster strikes, where would a production possibilities curve most likely shift?

a)

No shift

b)

To the left (as seen in Case 1)

c)

To the right (as seen in Case 2)

d)

all of the above

54.
What can cause a production possibilities curve to move to the right?
a)
Greater quality  or quantity of resources
b)
Increased trade
c)
New technology
d)
All of the above
55.
What does point B represent?
a)
Production at greater than the country's minimum potential
b)
Production is less than the country's minimum potential
c)
Productive inefficiency
d)
Productive efficiency
56.
What does point Y represent on the PPC?
a)
Efficiency
b)
Not possible with current resources
c)
Inefficiency
d)
A future shift inward of the PPC
57.
Which point represents "resources are not being used efficiently, or resources are being wasted or idle"?
a)
Point A
b)
Point Y
c)
Point X
d)
All of the above
58.
Which phrase could be used to describe a PPC shifting outward?
a)
Resources wasted or idle
b)
Economic Growth
c)
Inefficient use of resources
d)
A decrease in demand for a product
59.
The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?
a)
If Country Y is producing at point C, it is using all its resources efficiently
b)
The opportunity cost of producing more machines is constant
c)
Country Y cannot produce at point E
d)
The most efficient point of production is point D
60.
Labor, human capital, entrepreneurship, natural resources, and capital are all examples of which of the following?
a)
Outputs
b)
Substitutes in Production
c)
Absolute Advantage
d)
Factors of Production
61.
The simplified production possibilities curves for country A and B are shown. Which one of the following statements is correct?
a)
Country A has the comparative advantage in both goods
b)
Country A has the comparative advantage in chairs & Country B has the comparative advantage in shirts
c)
Country B has the absolute advantage in shirts only
d)
Country A has the comparative advantage in shirts & Country B has the comparative advantage in chairs
62.
A country produces computers and rice. If resources are fully employed and there is technological progress only in the production of rice, the opportunity costs of producing computers and rice will change in which of the following ways? 
a)
Computers: Increase / Rice: Increase
b)
Computers: Increase / Rice: Decrease
c)
Computers: No Change / Rice: Decrease
d)
Computers: Decrease / Rice: Decrease
63.
Based on the table provided, which one of the following statements is correct?
a)
Japan has the absolute advantage in producing cars
b)
Japan has the comparative advantage in producing cars
c)
The United States has the absolute advantage in producing both cars and computers
d)
The opportunity cost of producing a car in Japan is 1/2 a computer
64.
Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?
a)
Sam has an absolute advantage in making blankets
b)
Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets
c)
Sam has a comparative advantage in making blankets
d)
Sam has a comparative advantage in knitting sweaters
65.
Which of the following constitute the fundamental questions every economic system must answer?
a)
I, III, V only
b)
I, II, and IV only
c)
I, II, and V only
d)
II, IV, and V only
66.
Improvements in technology for producing all goods must result in:
a)
An inward shift in the production possibilities curve 
b)
A flatter production possibilities curve 
c)
An outward shift in the production possibilities curve 
d)
A steeper production possibilities curve 
67.
Two alternative production possibility frontiers for apples and wheat are shown in the figures. As more wheat is produced, how will the opportunity cost of producing wheat, as represented in Figures 1 and 2, be affected? 
a)
Figure 1: Decrease / Figure 2: Increase
b)
Figure 1: Increase / Figure 2: Decrease
c)
Figure 1: No Change / Figure 2: Increase
d)
Figure 1: No Change / Figure 2: Decrease
68.
If nations specialize according to their comparative advantage and engage in trade with each other, each nation can:
a)
Consume outside its production possibilities curve 
b)
Produce outside its production possibilities curve 
c)
Shift its production possibilities curve to the right 
d)
Produce more of all goods 
69.

The economic problem is that

a)

resources are limited and wants are limited.

b)

resources are unlimited and wants are limited.

c)

resources are limited and wants are unlimited.

d)

resources are unlimited and wants are unlimited.

70.

The opportunity cost of a good is

a)

its price in dollars and cents.

b)

the alternative goods forgone.

c)

the price of alternative goods foregone.

d)

none of the other options

71.

The opportunity cost of Australian households moving away from coal-powered energy to solar-powered energy includes (i) the loss of jobs in the coal industry, (ii) a cleaner environment, (iii) reduced coal production.

a)

(i), (ii) and (iii)

b)

(ii) and (iii)

c)

(iii) only

d)

(i) and (iii)

72.

A firm operating at 'X' produces 70 whips and 60 saddles. It changes production to 'Y' producing 20 whips and 90 saddles. The opportunity cost of this production change is

a)

20 whips

b)

30 saddles

c)

50 whips

d)

60 saddles

73.

The production possibility curve shows

a)

alternative combinations of two goods that an economy is capable of producing.

b)

the actual levels of production of two goods that the economy is achieving.

c)

alternative combinations of productive resources that can be used to produce two goods.

d)

the total value of two goods produced in one time period.

74.

If an economy is producing at a point inside its production possibility curve, then

a)

consumption is greater than production.

b)

productive resources are not used to their full potential.

c)

production of capital goods is inadequate.

d)

it cannot benefit by specialisation and trade.

75.

When a country’s people and all its other resources are fully employed, which of the following must be true before more of any one item can be produced?

a)

Less of another good or goods must be produced.

b)

There must be a general rise in prices to encourage supply.

c)

The government must intervene to produce needed products.

d)

There must be a general fall in the general price level.

76.

In terms of the production possibility curve, a decrease in unemployment would be best shown by

a)

a movement along the curve.

b)

an outward shift of the curve.

c)

a movement from a point inside the curve to a point closer to the curve.

d)

an inward shift of the curve.

77.
True or False: Everything that is scarce requires a choice, and these choices always involve a tradeoff.
a)
True
b)
False
78.
A country is responsible for producing guns for military defense and school lunches for students who can't afford it ("butter"). The opportunity cost of producing more guns is.. 
a)
decrease in the # of lunches divided by the increase in the # of guns
b)
increase in the # of guns divided by the decrease in the # of lunches
c)
decrease in the # of guns divided by the increase in the # of lunches
d)
increase in the # of lunches divided by the decrease in the # of guns
79.
If the production of good X increases by 3 units and production of good Y decreases by one unit, then the opportunity cost of one unit of X is ____ unit(s) of Y.
a)
3
b)
1
c)
1/3
d)
4
80.
The table above shows the production possibilities for a country. Based on the table, which of the following production combinations is a possibility? 
a)
28 pizzas and 5 pairs of shoes
b)
3 pairs of shoes and 23 pizzas
c)
2 pairs of shoes and 20 pizzas
d)
4 pairs of shoes and 15 pizzas
81.
Based on the table, if the country is currently producing at point B and decides to produce at point C, the opportunity cost for the additional pair of shoes is ____ pizzas.   
a)
26
b)
23
c)
3
d)
2
82.
What is the production possibilities curve?
a)
a graph that shows how much an economy can produce between 2 goods
b)
how much money something is
c)
the opportunity one has to give up in order to gain something else
d)
land, labor, capital, entrepreneurs
83.
What is opportunity cost?
a)
a graph that shows how much an economy can produce between 2 goods
b)
how much money something is
c)
the opportunity one has to give up in order to gain something else
d)
land, labor, capital, entrepreneurs
84.
How do you satisfy your unlimited wants in a world of limited resources?
a)
by making more money
b)
by making choices
c)
by stealing
d)
by setting a budget
85.
What is the fundamental problem of every society?
a)
labor costs
b)
scarcity
c)
economic interdependence
d)
market fluctuation
86.
Land, Labor, Capital, and Entrepreneurship 
a)
Diversification
b)
Deductions
c)
Portfolio
d)
Factors of Production 
87.
The opportunity cost of increasing production from 7 to 9 trucks is
a)
Scarcity
b)
2 boats
c)
2 trucks
d)
3 boats
88.
The opportunity cost of increasing production from 4 to 7 boats is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 trucks
89.
PPC stands for...
a)
Production Possibilities Curve
b)
Production Possibilities Cat
90.
The production possibilities curve is an illustration of what?
a)
Opportunity costs and trade-offs
b)
Only opportunity costs
c)
Only trade-offs
d)
none of the above
91.
A graphical representation of the alternative combinations of goods and services an economy can produce.
a)
Production Frontier Curve
b)
Production Possibilities Frontier
c)
Production Performance Curve
d)
Production Alternative Frontier
92.

Slope of production possibility curve is

a)

Straight line

b)

Convex to the point of origin

c)

Concave to the point of origin

d)

None of these

93.

When an economy is operating on production possibility curve it indicates

a)

Potential output = actual output

b)

Potential output greater then actual out put

c)

Potential output less than actual output

d)

None of these

94.

Increase in resources implies that production possibility curve

a)

Shift to the right

b)

Shift to the left

c)

Rotates to the right

d)

None of these

95.

Production possibility curve is straight line in case of

a)

Rising moc

b)

falling moc

c)

Constant moc

d)

None of these

96.

Concavity of production possibility curve implies

a)

Increasing slope

b)

Decreasing slope

c)

Constant slope

d)

none of thede

97.

The shape of production possibility curve is changed by

a)

Opportunity cost

b)

Total cost

c)

Marginal opportunity cost

d)

None of these.

98.

Slope of production possibility curve shows

a)

Moc

b)

Opportunity cost

c)

Average cost

d)

Total cost

99.

Production possibility curve is a convex in case of

a)

Constant Moc

b)

Rising Moc

c)

Falling moc

d)

None of these

100.

Rotation of the production possibility curve is due to

a)

Increase in resources

b)

Decrease in resources

c)

Improvement in technology

d)

All the above

101.

Production possibility curve is a set of

a)

Many goods

b)

One good

c)

Two goods

d)

Three goods

102.

Any point below production possibility curve shows

a)

full utilisation of resources

b)

Growth of resources

c)

Under utilisation of resources

d)

Effective use of resources

103.

Any point in production possibility curve shows

a)

Fully utilisation of resources

b)

Attainable combination of resources

c)

Efficient utilisation of resources

d)

All the above

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