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Production Possibilities Curve, Law of Demand-Unit 3 MCP

Total questions: 80

Worksheet time: 1hrs 8mins

Name
Class
Date
1.
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
2.
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
3.
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
4.

If there is improved technique of Production in both the goods , how will the PPC be affected?

a)

Leftward shift of PPC

b)

Rightward shift of PPC

c)

Rotation of PPC

d)

None of the above

5.

If there is improved technique of Production in both the goods , how will the PPC be affected?

a)

Leftward shift of PPC

b)

Rightward shift of PPC

c)

Rotation of PPC

d)

None of the above

6.
What does point Y represent on the PPC?
a)
Efficiency
b)
Unattainable / impossible
c)
Inefficency
d)
Nothing
7.
An incentive is:
a)
the option to select or make a decision when faced with two or more possibilities
b)
a conclusion or resolution reached after consideration
c)
a circumstance that contributes to a result or outcome
d)
a benefit or cost that influences a person's decision
8.
What can cause a production possibilities curve to move to the right?
a)
thousands of people move out of the country
b)
an epidemic kills thousands of young men and women
c)
a new invention lowers the cost of production
d)
the population is growing increasingly old
9.
If a natural disaster strikes, the production possibilities curve can shift
a)
No shift
b)
To the left
c)
To the right
d)
Outward on one axis only
10.
The opportunity cost of increasing production from 4 to 7 boats is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 trucks
11.
The opportunity cost of increasing production from 7 to 9 trucks is
a)
Scarcity
b)
2 boats
c)
2 trucks
d)
3 boats
12.

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

13.
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
14.
The opportunity cost of increasing production from 7 to 9 trucks is
a)
Scarcity
b)
2 boats
c)
2 trucks
d)
3 boats
15.
The opportunity cost of increasing production from 4 to 7 boats is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 trucks
16.
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
17.
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
18.
Efficiency is producing the maximum possible output from available resources
a)
True
b)
False
19.
Movement down the PPF curve indicates that the opportunity cost of more capital goods is producing more consumer goods
a)
True
b)
False
20.
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
21.
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
22.
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
23.

1-Demand for a commodity refers to:

a)

Need for the commodity

b)

Desire for the commodity

c)

Amount of the commodity demanded at a particular price and at a particular time

d)

Quantity demanded of that commodity

24.

An individual demand curve slopes downward to the right because of the:

a)

Working of the law of diminishing marginal utility

b)

substitution effect of decrease in price

c)

income effect of fall in Price

d)

All of the above

25.

The supply of a good refers to:

a)

Stock available for sale

b)

Total stock in the warehouse

c)

Actual Production of the good

d)

Quantity of the good offered for sale at a particular price per unit of time

26.

If a point lies on the curve this means the company/country/individual is being efficient. If a point lies inside the curve, what does that tell?

a)

They are being over efficient

b)

There is an idle, or unproductive, or use of resources

c)

It is not impossible with the given resources

d)

They are still efficient, just at another point

27.
If a point lies on the curve this means the company is being efficient. If a point lies inside the curve, this tells the company what?
a)
They are being over efficient
b)
They are not efficient
c)
It is impossible
d)
None of the above
28.
Changes in technology do not usually affect production
a)
True
b)
False
29.
If many workers decide to retire at an early age, the PPF would shift inward.
a)
True
b)
False
30.
Economic growth affects the PPF by...
a)
Shifting inward
b)
Shifting outward
c)
causing no change at all
d)
turning it into a straight line
31.
Suppose that a new machine that speeds up automotive production is introduced into the auto industry. This would cause the PPF to
a)
Shift outward
b)
Shift inward
c)
Do nothing
d)
Not enough information is provided
32.

In the following graph, PPC of country XYZ is currently at the blue line. Which of the following is best describes PPC (the blue line) shifts outwards.

a)

People from country ABC moved to country XYZ

b)

Climate changes has caused the production to decrease

c)

There is huge drop in country XYZ's economy growth

d)

There are technological advancements in the production of country ABC

33.

Based on the table, calculate the opportunity cost of producing 20 000 units automobiles.

a)

50000

b)

40000

c)

5000

d)

4000

34.

Based on the table, calculate the opportunity cost of producing 26 000 units computers.

a)

50000

b)

10000

c)

5000

d)

4000

35.

Based on the table, calculate the opportunity cost of when the production of automobiles increases from 30 000 units to 50 000 units.

a)

50 000

b)

10 000

c)

22 000

d)

23 000

36.

In the following graph, PPC of country XYZ is currently at the blue line. Suggest one way in which this production combination can increased

a)

Technology increase in both production

b)

Decrease in population

c)

There is huge drop in country XYZ's economy growth

d)

Natural disaster in country XYZ

37.

Which of these best describes the law of demand?

a)

if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

b)

if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

c)

there is no law of demand, each situation is unique and demand and prices cannot be predicted

d)

prices will go up for certain goods when quantity demanded goes up and vice versa

38.

The desire to have some good or service and the ability to pay for it

a)

supply

b)

equilibrium

c)

demand

d)

quantity demanded

39.

Which of these shows a decrease in the quantity demanded?

a)
b)
c)
d)
40.
If the price of Frozen Yogurt increased then the demand for ice cream will 
a)
increase
b)
decrease
41.
The diagram represents a
a)
increase in demand
b)
decrease in demand
42.
The downward slope of a demand curve
a)
represents the law of demand
b)
shows that as the price of a good rises, consumers increase the quantity they demand
c)
indicates how the quantity demanded changes when incomes rise and the good is a normal good
d)
indicates how demand changes when incomes rise and the good is a normal good
43.
The phrase "a change in demand" most directly implies a 
a)
movement along the curve
b)
movement along the price curve
c)
change in quantity demanded of a good
d)
shift in the demand curve
44.

How is a decrease in the price of a good illustrated on a demand graph?

a)

The demand curve shifts to the right.

b)

The demand curve shifts to the left

c)

There is upward movement along the demand curve

d)

There is downward movement along the demand curve.

45.

When the price of good A rises, people start to drink good B. In this case, what is good B considered?

a)

luxury good

b)

complementary good

c)

substitute good

d)

normal good

46.

A decrease in the average incomes of consumers will result in which of the following?

a)

A decrease in the demand for goods and services

b)

An increase in the demand for goods and services

c)

A decrease in the supply of goods and services

d)

An increase in the supply of goods and services

47.

Demand can be defined as the quantity of a product that consumers are able and willing to purchase

a)

at a particular price

b)

during a specified period of time provided

c)

other things remain constant

d)

All of the above

48.

A. If a person is willing to purchase a product but is not able to purchase it.


B. If a person is able to purchase a certain quantity of a product but is not willing to purchase it

a)

Both are considered as Demand

b)

(A) is demand while (B) is not

c)

(B) is demand while (A) is not

d)

Both cannot be considered as Demand

49.

Other things remaining the same, the amount demanded increases with a fall in price and diminishes with a rise in price.

a)

Is it true for Law of Demand

b)

It is incorrect for the Law of Demand

c)

It is true for Law of Supply

d)

It is incorrect for the Law of Supply

50.

Law of demand will be applicable only if:

a. No change in price of related commodities.

b. No Change in Population.

c. Alterations in Supply

d. Change in Income of the consumer

a)

a & b

b)

a, b & d

c)

b & d

d)

All of the Above

51.

Pizza and a Burger would be an example for

a)

Complementary Goods

b)

Substitute Goods

c)

Both

d)

Neither

52.

An example of Substitute goods could be:

a)

Car and Fuel

b)

Mobile Phone and Charging cable

c)

Butter and Jam

d)

Bread and Butter

53.

According to the Law of Demand, when prices drop...

a)

demand will also drop

b)

demand will increase

c)

quantity demanded is unchanged

d)

supply increases

54.

The more money that a person makes, the more they are willing to spend..

a)

diminishing marginal utility

b)

substitute effect

c)

total revenue

d)

income effect

55.

The more of a product that you consume, the less satisfaction the consumer enjoys..

a)

income effect

b)

diminishing marginal utility

c)

demand elasticity

d)

purchasing power

56.

As prices for a product decrease, demand for a product should increase..

a)

diminishing marginal utility

b)

elasticity

c)

income effect

d)

law of demand

57.

A product may be amazing, but unless consumers are __ and __ to purchase it, it's not in demand.

a)

willing

b)

wishing

c)

able

d)

planning

58.

When prices rise for a particular product, consumers will purchase lower-priced similar items..

a)

income effect

b)

substitute effect

c)

diminishing marginal utility

d)

law of demand

59.

An oil refinery fire could cause the price of gas to __

a)

increase

b)

decrease

c)

stabilize

d)

fluctuate wildly

60.
The diagram represents a
a)
increase in demand
b)
decrease in demand
61.
Consider the market for cars in Hong Kong. If the price of gasoline increases then the Demand for cars will
a)
increase
b)
decrease
62.
A new study has shown that avocados are extremely healthy. The demand for avocados has increased due to a change in
a)
market size
b)
price of a substitute good
c)
price of a complementary good
d)
tastes and preferences 
63.
The law of demand refers to how
a)
demand changes when people's incomes change
b)
demand changes when the prices of substitutes and complements change
c)
the quantity demanded changes when the price of the good changes
d)
the price of the good changes when people's demand for the good changes
64.
To access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet services
a)
the demand for Internet services increases
b)
the demand for Internet services decreases
c)
The demand for Internet services remains unchanged
d)
The demand for Internet services could increase, decrease, or stay the same depending on other factors 
65.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars are
a)
inferior goods
b)
substitute goods
c)
complementary goods
d)
normal goods
66.
When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: 
a)
the cost effect
b)
the inflationary effect
c)
the income effect
d)
the substitution effect
67.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars are
a)
inferior goods
b)
substitute goods
c)
complementary goods
d)
normal goods
68.
When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: 
a)
the cost effect
b)
the inflationary effect
c)
the income effect
d)
the substitution effect
69.
When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls, and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?
a)
the substitution effect
b)
the income effect
c)
an increase in the demand for Nike soccer balls
d)
the price effect
70.
Consider the market for cellular phones. Which of the following shifts the demand curve leftward? 
a)
studies showing using cellular phones can cause brain cancer
b)
a decrease in the price of cellular phones
c)
a decrease in the quantity demanded of cellular phones
d)
an increase in the services provided by cellular phones, such as text messaging
71.

When the price of a product increases, a consumer is able to buy less of it. Which effect does this describe?

a)

Cost Effect

b)

Inflationary Effect

c)

Income Effect

d)

Substitution Effect

72.

What is the only factor that causes a change in quantity demanded (Slide) along a demand curve?

a)

population

b)

income

c)

price

d)

tastes and preferences

73.

The law of demand states that

a)

price and quantity demanded are inversely related

b)

the larger the number of buyers in a market, the lower will be product price

c)

price and quantity demanded are directly related

d)

consumers will buy more of a product at high prices than at low prices

74.

When consumers react to an increase in a good's price by consuming less of that good and more of other goods.

a)

Cost Effect

b)

Income Effect

c)

Substitution Effect

d)

Inflationary Effect

75.
Due to a disappointing economy, Americans are cutting back on the family vacation road trips. What happens to the market for gasoline?
a)
Demand for gasoline will decrease 
b)
Demand for gasoline will increase
c)
Demand for gasoline will stay the same
76.
In a market economy, who decides on the prices of goods and services?
a)
government
b)
buyers and sellers
c)
firms
d)
local leaders
77.

The market demand curve for apple shows the;

a)

effect on market supply of a change in the demand for apple.

b)

quantity of an apple that consumers like to buy at different prices.

c)

marginal cost of producing and selling different quantities of an apple.

d)

effect of advertising expenditures on the market price of an apple.

78.

An increase in the price of electricity bill will force you to:

a)

increase your demand for kerosene heaters and coal.

b)

increase your demand for light bulbs and aircon.

c)

increase your demand for stereos and videokes.

d)

increase your demand for TVs and use of gadgets.

79.

An example of substitute goods could be:

a)

Car and fuel

b)

Butter and jam

c)

Bread and butter

d)

Mobile phone and charging cable

80.

Demand can be defined as the quantity of a product that consumers are able and willing to purchase.

a)

Other things remain constant

b)

During a specified period of time provided

c)

At a particular price

d)

All of the above

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