Question 1

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?
A) The production possibilities curves for these countries would have shifted outward.
B) The production possibilities curves for these countries would have shifted inward.
C) The production possibilities curves for these countries would have been unaffected.
D) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.

Accepted Answer

The Black Plague led to the death of a significant portion of the population, which could potentially decrease the amount of resources available for production, causing a shift inward in the production possibilities curves for these countries.

Question 2

A point inside the production possibilities curve represents a combination of goods that is
A) inefficient.
B) efficient.
C) unattainable.
D) attainable.

Accepted Answer

The answer of A point inside the production possibilities curve...

Question 3

If the citizens of a country were to work harder and take less leisure time, it would
A) shift the production possibilities curve outward.
B) cause an economy to operate inside its production possibilities curve.
C) shift the production possibilities curve inward.
D) cause an economy to move from one point on the production possibilities curve to another point on the curve.

Accepted Answer

If citizens work harder and take less leisure time, they will produce more goods and services, which will increase the economy's output. This will shift the production possibilities curve outward.

Question 4

Which of the following is true of a production possibilities curve?
A) It reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources.
B) It reveals the ideal level of technology for a country.
C) It assumes that the prices of the two products are equal.
D) For a country that could produce many different goods, it shows which two goods are most important to produce.

Accepted Answer

A production possibilities curve shows the maximum possible combination of two goods that can be produced from a fixed amount of resources, given the existing technology and assuming all resources are being used efficiently. It does not reveal the ideal level of technology, assume equal prices, or indicate which goods are most important to produce.

Question 5

When the production possibilities curve is bowed out, resources are
A) equally well-suited to production of both goods.
B) not being used efficiently.
C) not equally suited to the production of both goods.
D) available in larger and larger quantities as more of one good is produced.

Accepted Answer

When the production possibilities curve is bowed out, it indicates that resources are not equally suited to the production of both goods. This is because some resources may be better suited for the production of one good over the other, leading to diminishing marginal returns as more of one good is produced. Therefore, the curve is bowed outward to reflect the fact that more and more of one good needs to be given up to produce additional units of the other good.

Question 6

A production possibilities curve indicates that when resources are being used efficiently,
A) you can only produce more of one good only if you lower its price.
B) you can only produce more of one good only if you produce more of another good.
C) you can only produce more of one good only if you produce less of another good.
D) it is impossible to expand the total output of goods over time.

Accepted Answer

A production possibilities curve shows the maximum combination of goods that can be produced with a given set of resources and technology at any point in time. Therefore, if resources are being used efficiently, the production possibilities curve is at its maximum potential. This means that in order to produce more of one good, you have to produce less of another good because the resources are fully utilized and cannot be diverted from one use to another without sacrificing some output of the other good. This is what is meant by the concept of opportunity cost. So, choice C is the correct choice.

Question 7

Increasing opportunity costs of producing goods imply that the production possibilities curve will be
A) downward sloping.
B) upward sloping.
C) bowed inward.
D) bowed outward.

Accepted Answer

The answer of Increasing opportunity costs of producing goods imply...

Question 8

Which of the following will most likely cause an outward shift in the production possibilities curve?
A) a reduction in the man-made productive resources available to the economy as the result of a decline in investment
B) an increase in government payments to farmers for taking land out of production
C) an increase from 40 to 50 hours in the average number of hours worked per week
D) None of the above would cause an outward shift in the production possibilities curve.

Accepted Answer

An increase in the average number of hours worked per week will increase the amount of labor available to the economy, which can lead to an increase in output and an outward shift in the production possibilities curve. A reduction in man-made resources (A) or an increase in government payments to farmers for taking land out of production (B) would decrease the amount of resources available for production and cause an inward shift in the curve.

Question 9

The reason that the production possibilities curve is usually a bow-shaped curve instead of a straight line is that
A) it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line
B) early economists began drawing them in this way and the convention has continued throughout the years
C) output eventually reaches a maximum and then declines
D) resources are not perfectly adaptable to the production of all goods

Accepted Answer

The production possibilities curve is usually a bow-shaped curve instead of a straight line because resources are not perfectly adaptable to the production of all goods. This means that the opportunity cost of producing one good over another increases as we produce more of that good, ultimately leading to an inefficient use of resources and a decline in output. The bow shape of the curve illustrates this concept visually.

Question 10

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are efficiently utilized. An economy that operates inside this production possibilities curve
A) is using its resources inefficiently.
B) lacks the necessary technology to produce efficiently.
C) lacks the resources to produce goods efficiently.
D) is utilizing its available resources as efficiently as possible.

Accepted Answer

An economy that operates inside the production possibilities curve is using its resources inefficiently. This means that there is potential for the economy to produce more of one or both goods if resources were allocated more efficiently.

Question 11

If the resources of an economy are being used inefficiently, it would be
A) possible to increase production of all goods simultaneously.
B) possible to increase production of one good only if production decreased for the other goods.
C) not possible to increase production of any good.
D) not possible to increase economic growth.
E) possible to increase production with no effort.

Accepted Answer

The answer of If the resources of an economy are...

Question 12

As a general rule, technological progress
A) shifts the production possibilities curve outward, away from the origin.
B) reduces the slope of the production possibilities curve, making it flatter.
C) increases the slope of the production possibilities curve, making it steeper.
D) shifts the production possibilities curve inward, toward the origin.

Accepted Answer

Technological progress allows for the discovery of new resources or the improvement of existing technology, both of which increase the potential output of goods and services. This causes a shift in the production possibilities curve outward, away from the origin.

Question 13

The production possibilities curve illustrates the basic principle that
A) an economy's capacity to produce is unrelated to its population.
B) if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced.
C) an economy will automatically move toward a point at which all of its resources are being used inefficiently.
D) if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.

Accepted Answer

The production possibilities curve shows the maximum combination of two goods that an economy can produce with its given resources and technology. The curve assumes that all resources are being used efficiently, and any point on the curve represents a combination of two goods that maximizes the production of one good, given the production of the other. Thus, to produce more of one good, a society must produce less of another good, because the resources are limited and can only be used in one way or another. Therefore, option D is correct.

Question 14

A point on the production possibilities curve represents a combination of goods that is
A) inefficient.
B) efficient.
C) unattainable.
D) attainable.

Accepted Answer

A point on the production possibilities curve represents an efficient combination of goods where all resources are fully utilized to produce the maximum output possible. Points inside the curve are inefficient and points outside the curve are unattainable.

Question 15

Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if
A) she also spends more time doing other things.
B) she spends less time doing other things.
C) Daylight Savings Time begins this week, so everyone moves their clocks ahead one hour.
D) none of the above.

Accepted Answer

The production possibilities curve shows the maximum combination of goods and services that can be produced with a given set of resources. If Abigail is already using her time efficiently, then to spend more time studying, she would have to give up some time that she is currently using for something else, represented as a movement along the production possibilities curve. Therefore, the only way for her to spend more time studying would be to spend less time doing other things (choice B). The other options are not relevant to the situation.

Question 16

Which of the following most accurately indicates the implications of an economy's production possibilities curve?
A) If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
B) If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods.
C) Over time, it is generally impossible for a country to expand its production of goods.
D) An economy will automatically move toward a point that lies outside of the production possibilities curve unless proper government policy constrains production.

Accepted Answer

The answer of Which of the following most accurately indicates...

Question 17

A point outside the production possibilities curve represents a combination of goods that is
A) inefficient.
B) efficient.
C) unattainable.
D) attainable.

Accepted Answer

A point outside the production possibilities curve represents a combination of goods that is unattainable, meaning it is not possible to produce with the given resources and technology.

Question 18

If an economy operates at a point within its production possibilities curve,
A) it lacks the resources necessary to reach the curve.
B) it is utilizing all of its resources efficiently.
C) it does not confront the problem of scarce goods relative to unlimited wants.
D) it is not efficiently using all of its resources.

Accepted Answer

If an economy operates at a point within its production possibilities curve, it means that it is not efficiently using all of its resources. This is because the economy has the potential to produce more goods and services but is not doing so due to inefficient allocation of resources.

Question 19

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as
A) an inward shift of the production possibilities curve.
B) an outward shift of the production possibilities curve.
C) operating at a point outside the production possibilities curve.
D) operating at a point inside the production possibilities curve.

Accepted Answer

Operating at a point inside the production possibilities curve indicates that the economy is using its resources inefficiently and failing to reach its full potential output. This may occur due to factors such as poor resource allocation, inadequate technological advancement, or lack of skilled labor.

Question 20

Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?
A) an increase in the labor force
B) an increase in unemployment
C) development of an improved technological method of production
D) a decrease in the stock of physical capital

Accepted Answer

A decrease in the stock of physical capital, such as factories or machines, would limit the country's ability to produce goods and services efficiently, causing the production possibilities curve to shift inward. An increase in the labor force or an improvement in technology would shift the curve outward, while an increase in unemployment may have little effect on the curve.

Quiz 2: Some Tools of the Economist

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

A point inside the production possibilities curve represents a combination of goods that is

If the citizens of a country were to work harder and take less leisure time, it would

Which of the following is true of a production possibilities curve?

When the production possibilities curve is bowed out, resources are

A production possibilities curve indicates that when resources are being used efficiently,

Increasing opportunity costs of producing goods imply that the production possibilities curve will be

Which of the following will most likely cause an outward shift in the production possibilities curve?

The reason that the production possibilities curve is usually a bow-shaped curve instead of a straight line is that

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are efficiently utilized. An economy that operates inside this production possibilities curve

If the resources of an economy are being used inefficiently, it would be

As a general rule, technological progress

The production possibilities curve illustrates the basic principle that

A point on the production possibilities curve represents a combination of goods that is

Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

A point outside the production possibilities curve represents a combination of goods that is

If an economy operates at a point within its production possibilities curve,

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as

Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?