Question 1

-Which of the following statements about a movement along the production possibilities curve in the above figure is FALSE?

Accepted Answer

The production possibilities curve illustrates the concept of opportunity cost, which is the cost of forgoing the next best alternative when making a decision. Therefore, choosing one point over another on the curve always involves opportunity costs, making statement D false.

Question 2

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure,we know that

Accepted Answer

The answer of 
-If the farmer is producing 5000 bushels...

Question 3

If an economy is operating at a point inside the production possibilities curve,then

Accepted Answer

When an economy is operating inside the production possibilities curve, it means that it is not utilizing all of its available resources to produce goods and services. This represents an inefficient use of society's resources. Therefore, the correct answer is A. The curve will not necessarily move to the left, economic policy to slow growth is not required. The economy may be producing too many or too few consumer goods, but the primary issue is the inefficient use of resources.

Question 4

-Refer to the above figure.If the farmer is producing 4,000 bushels of beans and 38,000 bushels of wheat,then we know the farmer

Accepted Answer

The answer of 
-Refer to the above figure.If the farmer...

Question 5

How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

Accepted Answer

In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. This means that the opportunity cost of producing one good over the other is constant and does not increase as more of that good is produced. In contrast, in an economy represented by a traditional production possibilities curve with a bowed shape, the law of increasing relative cost applies, meaning that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases, resulting in a bowed shape of the production possibilities curve. Therefore, the straight-line production possibilities curve economy differs from the traditional production possibilities curve economy in terms of the application of the law of increasing relative cost.

Question 6

How can the concepts of opportunity costs,scarcity and choice by illustrated by the production possibilities curve?

Accepted Answer

The answer of How can the concepts of opportunity costs,scarcity...

Question 7

What does a production possibilities curve show?

Accepted Answer

The answer of What does a production possibilities curve show?...

Question 8

If the production possibilities curve is a downward sloping straight line,then

Accepted Answer

When the production possibilities curve is a downward sloping straight line, it implies that resources can be shifted from the production of one good to another with no loss in efficiency, indicating perfect adaptability for alternative uses. This contrasts with a bowed-out curve, which would suggest increasing opportunity costs and specialized resources.

Question 9

When deriving the production possibilities curve,it is assumed that

Accepted Answer

The production possibilities curve assumes that resources are efficiently used, meaning that the economy is producing at its maximum potential with the given resources. The other options (A, B, and C) are not assumptions made when deriving the production possibilities curve.

Question 10

What does the slope of the production possibilities curve represent? Explain.

Accepted Answer

The answer of What does the slope of the production...

Question 11

Between points "b" and "c" in the above figure,the opportunity cost of 250 more bushels of corn is

Accepted Answer

The answer of Between points "b" and "c" in the...

Question 12

A country operates inside its production possibilities curve;this may be caused by

Accepted Answer

Operating inside the production possibilities curve means that a country is not producing at its maximum potential. This may be caused by unemployed resources, such as labor and capital, which could be utilized to increase production and move the country towards the production possibilities curve. The other choices do not necessarily explain why the country is operating inside the curve.

Question 13

-In the above figure,which of the following points indicates the efficient use of resources?

Accepted Answer

The answer of 
-In the above figure,which of the following...

Question 14

Which of the following would NOT allow society to move to point "h" in the above figure?

Accepted Answer

The answer of Which of the following would NOT allow...

Question 15

The production possibilities curve bows out because

Accepted Answer

The law of increasing additional cost states that as we produce more and more of one good, the opportunity cost of producing each additional unit of that good increases. This occurs because resources are not equally suited to producing all goods and services, so as we shift resources from producing one good to producing more of another, we have to give up successively larger amounts of the first good in order to produce each additional unit of the second good. This is what causes the production possibilities curve to be bowed out, or concave.

Question 16

The shape of the production possibilities curve in the above figure indicates that

Accepted Answer

The curve is bowed outwards, indicating that as more of one good is produced, the opportunity cost of producing each additional unit of that good increases. This is characteristic of increasing costs, which means that resources are not perfectly adaptable to the production of both goods. Therefore, there is a trade-off between producing more of one good and producing less of the other, which results in a decreasing marginal rate of transformation.

Question 17

All points inside the production possibilities curve indicate

Accepted Answer

The production possibilities curve represents the maximum output that an economy can produce given its available resources and technology. Any point inside the curve indicates that the economy is producing below its maximum potential and is therefore inefficient in production.

Question 18

A graphical representation which shows the trade-off that occurs when more of one output is obtained at the sacrifice of another is called

Accepted Answer

A production possibilities curve shows the maximum combinations of two goods that can be produced with the given resources and technology, and it visually demonstrates the trade-off between producing more of one good at the expense of producing less of the other. The other options deal with different economic concepts and do not apply to this scenario.

Question 19

Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land.The opportunity cost of consuming another 100 bushels of corn today is

Accepted Answer

The answer of Suppose an acre of land yields 100...

Question 20

-Refer to the above figure.If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat,then we know that

Accepted Answer

The point described (8,000 bushels of both beans and wheat) would fall inside the production possibilities curve, indicating that not all resources are being used efficiently or to their full potential.

Quiz 2: Scarcity and the World of Trade-Offs