Question 1

The production possibilities curve illustrates all of the following concepts except:

Accepted Answer

The production possibilities curve represents the limitations on production due to scarcity, opportunity cost, and the availability of resources, as well as the effects of the law of increasing costs. However, it does not illustrate the concept of unlimited wants, as this is a basic assumption of economics that underlies the entire model, rather than a specific feature of the production possibilities curve.

Question 2

An efficient economy:

Accepted Answer

An efficient economy uses available resources fully, uses the best division of labor, and produces an output combination at some point along the production possibility curve. Therefore, all of the above choices are correct.

Question 3

When the production possibilities curve is bowed out,resources are:

Accepted Answer

When the production possibilities curve is bowed out, it indicates that resources are not equally suited to the production of both types of goods. This is because the opportunity cost of producing one good over the other increases as more and more of that good is produced. In other words, the resources are better suited for producing one good than the other.

Question 4

What shape is the production possibilities curve usually expected to exhibit?

Accepted Answer

The production possibilities curve is usually expected to exhibit a bowed out (concave) shape because of the law of increasing opportunity cost. As we produce more of one good, we must give up increasingly larger quantities of the other good, which causes the curve to bow outwards.

Question 5

The various combinations of goods and services that can be produced,when an economy uses its available resources and technology efficiently,is called:

Accepted Answer

The production possibilities curve represents all possible combinations of goods and services that can be produced given the resources and technology available in an economy. It shows the trade-offs and opportunity costs of producing one good over another, and how an economy can achieve efficient production.

Question 6

If an economy is producing at full employment,it means that:

Accepted Answer

Full employment means that all available resources, such as labor and capital, are being used to produce goods and services. This implies that the economy is producing at its maximum potential, which is represented by the production possibilities curve. Therefore, the economy is producing along the production possibilities curve at full employment. Choices A, B, D, and E are incorrect because they assume that the economy is not operating at full employment.

Question 7

A production possibilities curve shows the various:

Accepted Answer

A production possibilities curve (PPC) shows the different combinations of goods and services that an economy can produce using its available resources and technology. It represents the maximum amount of output that an economy can produce given its resources and production technology at any point in time. Therefore, the correct choice is C, as it represents the different combinations of goods an economy has the capacity to produce. Choices A, B, and D are incorrect because a PPC does not show prices or output quantities, but rather the maximum possible output combinations.

Question 8

Production possibilities curve analysis includes the idea of:

Accepted Answer

Production possibilities curve analysis takes into account the concept of opportunity cost, which refers to the trade-offs that must be made when choosing how to allocate limited resources. It also recognizes the reality of scarcity, which means that resources are not unlimited, and therefore, choices about how to allocate them must be made. Finally, the analysis involves determining the maximum production possibilities, given the available resources. Therefore, the correct answer is D, all of the above.

Question 9

A production possibility graph slopes down because of:

Accepted Answer

The answer of A production possibility graph slopes down because...

Question 10

The production possibilities curve depicts the various combinations of two goods that can be:

Accepted Answer

The production possibilities curve is a graphical representation of the different combinations of two goods that can be produced with a given technology, assuming all resources are fully utilized. It shows the trade-offs that must be made between producing one good or the other, given the limited resources available.

Question 11

Of factors which affect any economy's production potential,the best two listed below are:

Accepted Answer

Resources and technology are often considered the two most important factors that affect an economy's production potential. Resources refer to the natural, human, and physical resources available to an economy, while technology refers to the knowledge and techniques used to transform those resources into goods and services. The more abundant and efficient these factors are, the greater an economy's potential output will be. Prices, outputs, wages, and taxes are important factors that influence the allocation of resources and the distribution of production, but they do not have as direct an impact on a country's overall production potential.

Question 12

When an economy's resources are not fully employed,then it must be true that the:

Accepted Answer

When an economy's resources are not fully employed, the production point is located inside and to the left of the production possibilities curve. This means that the economy is producing less than its potential maximum output due to underutilization of resources, such as labor or capital. The production point being located along the curve or outside and to the right of the curve would indicate that the economy is already producing at its maximum potential. The production possibilities curve would not shift in this scenario.

Question 13

The production possibilities curve shows different combinations of goods that:

Accepted Answer

The production possibilities curve shows different combinations of goods that can be produced with the available technology. It is a graphical representation of the trade-offs and opportunity costs that arise when producing one good over another. It illustrates the maximum amount of one good that can be produced for every possible level of production of the other good, given the available resources and technology. The production possibilities curve helps to demonstrate the concept of scarcity and the need to make choices.

Question 14

Efficient production means producing:

Accepted Answer

Efficient production means that a firm is producing the maximum feasible output for a given amount of resources. This means that they are using their resources in the most effective way possible, which leads to lower costs and higher profits. Choices A and B are not efficient because they are producing less or more than what is feasible, respectively. Choices D and E do not necessarily relate to efficiency, as a firm may need to produce more than what is needed in some situations (such as building up inventory for future demand).

Question 15

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis.On this diagram,the opportunity cost of good X,in terms of good Y,is represented by the:

Accepted Answer

The opportunity cost of good X, in terms of good Y, is represented by the slope of the production possibilities curve, which is the change in Y (good Y) for each change in X (good X) along the curve. This slope indicates how much of good Y must be given up to produce more of good X.

Question 16

Which of the following is not true about a production possibilities curve? The curve:

Accepted Answer

The production possibilities curve does not indicate which production point will be chosen. That decision is made by the individual or the society based on their preferences and priorities. The curve only shows the feasible options for production.

Question 17

The production possibility curve is bowed outward from the origin because of:

Accepted Answer

The production possibility curve is bowed outward from the origin because of the law of increasing opportunity costs. As we move along the production possibility curve, we need to give up more and more of one good to produce an additional unit of the other good. This is because resources are not equally efficient in producing both goods, and as we allocate more and more resources to a particular good, their opportunity cost in terms of the other good increases. This leads to a convex shape of the production possibility curve.

Question 18

The production possibilities curve demonstrates the basic economic principle that:

Accepted Answer

The production possibilities curve illustrates the concept of opportunity cost, which means that to produce more of one good, a society must give up some of another good. Therefore, to produce more of any one thing, assuming full employment, the economy must produce less of something else, as shown in the production possibilities frontier.

Question 19

The law of increasing costs holds that the opportunity cost:

Accepted Answer

The law of increasing costs states that as production of one good increases, the opportunity cost of producing an additional unit of that good increases. This is because resources that are well-suited to the production of the first units of a good become scarce relative to other resources as the production of the good expands. Thus, more resources have to be diverted from the production of other goods to produce additional units of the first good, which raises the opportunity cost of that production.

Question 20

A production possibilities curve shows the:

Accepted Answer

A production possibilities curve shows the various combinations of goods that can be produced with the given resources and technology.

Quiz 2: Production Possibilities,Opportunity Cost,and Economic Growth