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Worksheets1.4 Production Possibility Curve
Total questions: 40
Worksheet time: 42mins
The next best alternative forgone
The price you pay to purchase something
The benefit you gain by making an economic decision
The next best alternative forgone when making an economic decision
How does a production possibility curve show that scarcity exists?
It shows that a rise in demand for one of the products increases its price.
It shows that as more resources are used to produce a product, its price rises.
It shows that at any point outside the production possibility curve an economy is wasting
resources.
It shows that there is a limit to the quantity of products that can be produced with existing resources and technology.
What is the abbreviation for PPC?
Possibility Production Curve
Production Possibility Curve
Production Possible Choice
Possibility Production Frontier
Why do you think the curve shape is that way?
Different types of resources have been utilized for both product
Same types of resources have been utilized for both product
without the resources have been utilized for both product
some of the resources have been utilized for both product
Which coordinate is impossible to be produced?
F
G
E
A
Which coordinate is inefficient to produce both products?Multiple answer
B
F
G
E
Calculate the opportunity cost of choice B to A
Let go 55 tons of steel
Let go 15 tons of wheat
Additional 20 tons of wheat
Additional 55 tons of steel
Which scenario contributes towards the shifting of the curve in the picture above?
When a country is struck by a natural disaster, natural resources are either exhausted or reduced due to the incident.
A population increase leads to increasing numbers of buyers and school admission.
Economic decline due to Covid 19
Inflation occurs and the price of goods had increased to support Malaysia's economy
Which of the following does NOT illustrate opportunity cost?
I should buy a book rather than a food
If I buy a computer, I must do without a 35” television
If I spend a lot now means I will spend more in the future
If I study today, I must give up going to the football game
Calculate the opportunity cost of choice B to A
Let go 55 tons of steel
Let go 15 tons of wheat
Additional 20 tons of wheat
Additional 55 tons of steel
Calculate the opportunity cost if choice A to D?
Additional 90 tons of steel
Letgo 90 tons of wheat
Additional 70 tons of steel
Letgo 65 tons of wheat
What does PPC show? Multiple answer.
The maximum combination of any two categories of goods and services that can be produced
Efficiency → operate with full employment and full production capacity
normative economics
various possible combinations of goods and services
How does a production possibility curve show that scarcity exists?
It shows that a rise in demand for one of the products increases its price.
It shows that as more resources are used to produce a product, its price rises.
It shows that at any point outside the production possibility curve an economy is wasting
resources.
It shows that there is a limit to the quantity of products that can be produced with existing resources and technology.
The diagram shows two production possibility curves for an economy.
What could have caused the change in the economy’s production possibility curve from XX
to YY?
a decrease in the price level
a large number of industrial disputes
a major earthquake
an increase in unemployment
The diagram shows a production possibility curve for an economy that can provide financial services or agricultural products. The economy is at point X.
Bad weather destroys part of the agricultural produce.
At which point will the economy be in the diagram?
A
B
C
D
The diagram below shows a production possibility boundary for an economy that produces goods and services.
From the diagram it can be concluded that
point X is productively efficient and point Y is allocatively
efficient.
point Y is productively efficient and point X is allocatively
efficient.
points X and Y are allocatively efficient.
points X and Y are productively efficient.
The following diagram shows the production possibility frontier for an economy that produces bread and honey.
If the economy is initially at point W, then the opportunity cost of moving to point X is
6 units of honey.
8 units of honey.
12 units of bread.
23 units of bread.
What does PPC show? Select Multiple options.
Describes the production of only two products in economy.
It explains the production when there is full and efficient utilisation all resources in economy
It explains the consumption pattern in economy
It is the combination of all possible output points of two goods given that technology and resources are fixed.
Which of the following are the choices in case the technology is fixed and all resources are efficiently employed. Choose the correct option/s.
G
C
A
E
B
Which point represents that production would be unattainable/ impossible?
G
E
D
F
B
Which coordinate(s) is/are inefficient to produce both products? Choose the correct option/s.
B
F
G
E
The following diagram shows the production possibility frontier for an economy that produces bread and honey.
If the economy is initially at point W, then the opportunity cost of moving to point X is
6 units of honey.
8 units of honey.
12 units of bread.
23 units of bread.
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?
They are being over efficient
They are being inefficient
It is not impossible with the given resources
They are still efficient, just at another point
Efficiency is...
Combining resources to achieve balanced output
Employing sufficient resources to meet demand
Employing resources in production
The full employment of resources in production
Inefficient is...
Combinations of output can be achieved will full use of resources
the underemployment of all resources
using sufficient resources to achieve combinations of output
the underemployment of labour
Which statement is correct about Opportunity Costs. You may choose multiple answers.
Is the next best alternative forgone when making an economic decision
Not all costs are monetary costs
Opportunity cost can be corrected
Something must be given up in order to pursue/ produce something else
What is meant by productive capacity?
The maximum level of production attainable given the available resources and current technology.
The total amount of goods and services demanded by consumers in the market.
The point where the production possibility curve intersects with the demand curve.
The level of production that maximises profits for a firm in a competitive market.
How is the concept of opportunity cost shown on a PPC diagram?
The distance between points on the PPC curve represents the opportunity cost.
The points along the PPC curve indicates the opportunity cost.
The vertical axis of the PPC represents the opportunity cost.
The horizontal axis of the PPC represents the opportunity cost.
Which two conditions must hold for an economy to be operating on its PPC?
Full employment of resource
Stable price levels and balanced trade.
High levels of consumer spending and investment.
There is efficiency in the use of resources
What are the causes of a shift of the PPC? You may choose multiple answers.
Changes in consumer preferences and tastes.
Technological advancements and innovation.
Changes in the size of the population.
Changes in resource availability and quality.
What would causes of a shift of the PPC? You may choose multiple answers.
Changes in government policies and regulations
Changes in international trade and globalization
Changes in natural disasters and environmental conditions
Changes in resource availability and quality.
What are the causes of a shift of the PPC? You may choose multiple answers.
Changes in consumer preferences and tastes.
Technological advancements and innovation.
Changes in the size of the population.
Changes in resource availability and quality.
What would cause an OUTWARD shift in a production possibility curve?
A decrease in technological advancements
An increase in the labor force
A decrease in the availability of resources
Decreased availability of skilled laborAn increase in government regulations
What would cause an OUTWARD shift in a production possibility curve?
A decrease in consumer demand
An increase in trade restrictions
An increase in investment in capital goods
A decrease in productivity
What would cause an OUTWARD shift in a production possibility curve?
A decrease in foreign direct investment
An increase in consumers
An increase in specialisation and division of labour
A decrease in international trade
What would cause an INWARD shift in a production possibility curve?
Technological advancements
Increase in the labor force
Natural disaster affecting production facilities
Decrease in the cost of raw materials
What would cause an INWARD shift in a production possibility curve?
Increase in consumer demand
Introduction of new production techniques
Expansion of international trade
Decrease in the availability of resources
What would cause an INWARD shift in a production possibility curve?
Outflow of skilled labor
Expansion of the education system
Increase in entrepreneurship
Implementation of favorable government policies
What would cause an INWARD shift in a production possibility curve?
Introduction of new technology
Government imposed bans on resources
Increase in investment in capital goods
Improvement in infrastructure
