Question 1

The production possibilities frontier illustrates the

Accepted Answer

The production possibilities frontier (PPF) shows the maximum combinations of goods and services that can be produced with the given resources and technology. The PPF illustrates the concept of scarcity, which means that there are limits to what can be produced with the resources available. Therefore, the PPF represents the limits to people's wants, as they cannot have unlimited quantities of all goods and services.

Question 2

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Accepted Answer

D

Question 3

In the production possibilities model,the vertical axis measures ________ and the horizontal axis measures ________.

Accepted Answer

The vertical axis in the production possibilities model represents the quantity of one good or service being produced, while the horizontal axis represents the quantity of a different good or service that could have been produced instead. Therefore, choice A - the quantity of a good or service; the quantity of another good or service - is the best choice.

Question 4

Moving from one point to another on a production possibilities frontier implies

Accepted Answer

Moving along the production possibilities frontier means that we are reallocating resources from one good to another. Therefore, to increase the production of one good, we must decrease the production of another. This is represented by movement along the production possibilities frontier.

Question 5

A production possibilities frontier shows

Accepted Answer

A production possibilities frontier shows the various combinations of output a nation can produce at a certain time, given its available resources and technology. It illustrates the maximum amount of one good that can be produced for every possible level of production of the other good. It is a graphical representation of the trade-offs that have to be made between two goods in order to allocate resources efficiently.

Question 6

In the production possibilities frontier model,an unattainable point lies

Accepted Answer

An unattainable point is a point that lies outside the production possibilities frontier and cannot be reached with the current resources and technology. Therefore, the best choice is C, which states that unattainable points are only outside the production possibilities frontier.

Question 7

When all of the available factors of production are being efficiently employed,the

Accepted Answer

When all available factors of production are being efficiently employed, the economy is producing at a point on its PPF. This means that the economy is producing the maximum output possible given its resource constraints.

Question 8

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Airplanes } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Cruise ships } \
\text { (number) }
\end{array} \
\hline \text { A } & 100 & 0 \
\text { B } & 80 & 20 \
\text { C } & 50 & 40 \
\text { D } & 0 & 60 \
\hline
\end{array}$$
-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of cruise ships?

Accepted Answer

In possibility A, there are 0 cruise ships being produced, therefore 0 resources are being devoted to their production.

Question 9

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Airplanes } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Cruise ships } \
\text { (number) }
\end{array} \
\hline \text { A } & 100 & 0 \
\text { B } & 80 & 20 \
\text { C } & 50 & 40 \
\text { D } & 0 & 60 \
\hline
\end{array}$$
-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of airplanes?

Accepted Answer

In possibility A, all resources are devoted to the production of airplanes since there are no cruise ships produced.

Question 10

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

Accepted Answer

Moving along a production possibilities frontier (PPF) implies changing the allocation of resources between two goods, but the total amount of resources available and the technology level are constant. This means labor, capital, and technology levels do not change; only the distribution of these resources between the production of different goods changes.

Question 11

In a production possibilities frontier diagram,the attainable production points are shown as

Accepted Answer

The production possibilities frontier shows the maximum possible combinations of two goods that can be produced with the given resources and technology. Any point on the frontier or inside the frontier represents a feasible combination of the two goods as it is within the production capacity. However, points beyond the frontier are unattainable with the given resources and technology, and hence are not feasible. Therefore, both the points on the frontier and inside the frontier are attainable, making option D the correct answer.

Question 12

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As the country moves along the frontier closer to the horizontal axis,

Accepted Answer

As the country moves along the production possibility frontier closer to the horizontal axis, it means that the country is allocating more resources to produce shoes, hence more shoes are produced.

Question 13

The production possibilities frontier is the

Accepted Answer

The production possibilities frontier represents the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. It shows the maximum output that can be produced with the given resources. Option A is incorrect because opportunity cost is always present. Option B is incorrect because it represents inefficient use of resources, which is not accounted for in the production possibilities frontier. Option D is incorrect because the production possibilities frontier assumes technology is constant. Option E is incorrect because the production possibilities frontier does not represent opportunity cost combinations, but rather the maximum output that can be produced.

Question 14

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

Accepted Answer

Requiring workers to retire at the age of fifty would decrease the number of available workers, which would cause a decrease in the nation's potential output. The production possibilities frontier would, therefore, shift inward.

Question 15

Production efficiency is represented by ________ a production possibilities frontier.

Accepted Answer

Production efficiency means that resources are being used in the most efficient way possible. This is represented by all points on the production possibilities frontier, which shows the maximum possible level of output that can be produced with the given resources and technology. Points inside the frontier represent inefficiency, while points outside the frontier are unattainable given current resources and technology. A movement along the frontier represents a shift in production of one good for another, but does not necessarily indicate an increase in production efficiency. Only one point on the frontier would not accurately represent the range of production possibilities.

Question 16

The production possibilities frontier is the boundary between the

Accepted Answer

The production possibilities frontier represents the maximum attainable combinations of two goods or services that an economy can produce with its given resources and technology. Points on the frontier are attainable and efficient, while points inside the frontier are attainable but inefficient. Points outside the frontier are unattainable with the current resources and technology. Therefore, option B is the correct answer.

Question 17

The United States produced approximately ________ worth of goods and services in 2011.

Accepted Answer

The United States' gross domestic product (GDP), a measure of the value of goods and services produced in a country, was approximately $15 trillion in 2011.

Question 18

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Accepted Answer

A major earthquake would result in destruction of resources such as capital and labor which would reduce the nation's ability to produce goods and services. As a result, the production possibilities frontier would shift inward.

Question 19

Which of the following is an assumption used when drawing a production possibilities frontier?
i.Human wants and desires are limited to what is available.
ii.Only two goods are considered.
iii.The level of technology is fixed and unchanging.

Accepted Answer

The production possibilities frontier (PPF) assumes that only two goods are considered for simplicity and that the level of technology is fixed and unchanging to analyze the trade-offs and opportunity costs. It does not assume that human wants and desires are limited to what is available; instead, it illustrates the limits of production capabilities and the choices societies must make.

Question 20

When drawing a production possibilities frontier,which of the following is held constant?

Accepted Answer

The available factors of production (such as labor, capital, and natural resources) and the state of technology are held constant when drawing the production possibilities frontier. This means that the economy is assumed to be using its resources efficiently, and any movement along the curve represents a trade-off between producing different goods and services. The amount of money in the economy, the prices of goods and services, and the quantity of the goods and services that are produced can all change without affecting the shape or position of the production possibilities frontier.

Quiz 3: The Economic Problem