Question 1

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point
A) where the slope of the PPF is positive.
B) where the slope of the PPF is zero.
C) inside the PPF.
D) outside the PPF.

Accepted Answer

The PPF represents the maximum possible output that can be produced with the given resources and technology. Assigning resources to inappropriate tasks means that they are not being used efficiently and effectively, resulting in a lower output level. This output level will be inside the PPF because it is below the maximum possible output level.

Question 2

Any point on a production possibilities frontier (PPF) itself is
A) production efficient.
B) unattainable.
C) inefficient.
D) equitable.

Accepted Answer

Any point on the PPF represents the maximum possible combination of two goods that can be produced using available resources and technology. Therefore, it is production efficient as it indicates the economy is utilizing its resources to produce the maximum possible output. Points inside the PPF are inefficient as they represent a suboptimal use of resources, and points outside the PPF are unattainable as they require more resources than what is currently available. Equitable does not apply to points on the PPF.

Question 3

If production point is inside the production possibilities frontier
A) it is not possible to produce more of both goods.
B) production is inefficient.
C) in order to produce more of one good, less of the other must be produced.
D) production is in the "unattainable" region.

Accepted Answer

If the production point is inside the production possibilities frontier, it means that the economy is not producing at its maximum potential. This is because it is possible to produce more of both goods without sacrificing the production of the other good. Therefore, the production is inefficient.

Question 4

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must
A) be using resources inefficiently today, but will be more efficient in the future.
B) be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods.
C) must be producing outside the production possibilities frontier and will continue to do so in the future.
D) must not have private ownership of property and will have to follow planning authorities' decisions today and in the future.

Accepted Answer

If a country is producing along the production possibilities frontier (PPF) today, it means it is already using its resources efficiently. If it wants to produce more capital goods today, it will have to decrease its current consumption (i.e. produce fewer consumer goods) and move towards the capital goods end of the PPF. This means that the country will still be producing along the PPF, but at a different point that has a higher proportion of capital goods. In the long run, this will shift the PPF outward, allowing the country to produce more of both consumer and capital goods. Therefore, option B is the correct answer.

Question 5

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by
A) any point on either the horizontal or the vertical axis.
B) the midpoint of the production possibilities frontier.
C) a point outside the production possibilities frontier.
D) a point inside the production possibilities frontier.

Accepted Answer

A point inside the production possibilities frontier represents a situation where resources are not fully utilized. This could be due to inefficiencies, lack of technology or skills, or a shortage of resources. Points on the frontier represent the maximum output possible given the available resources and technology. Points outside the frontier are unattainable with the current level of resources and technology. The midpoint of the frontier does not necessarily indicate underutilization of resources.

Question 6

If an economy is operating at a point inside the production possibilities frontier, then
A) society's resources are being inefficiently utilized.
B) the PPF curve will shift inward.
C) society's resources are being used to produce too many consumer goods.
D) economic policy must retard further growth of the economy.

Accepted Answer

Operating inside the production possibilities frontier indicates that the economy is not using all its available resources to produce goods and services efficiently. Hence, society's resources are being inefficiently utilized.

Question 7

A society that is producing on its production possibilities frontier is
A) not utilizing all of its resources.
B) not being technologically efficient.
C) producing too much output.
D) fully utilizing all of its productive resources.

Accepted Answer

A society that is producing on its production possibilities frontier is fully utilizing all of its productive resources. This means that it is both efficient in its use of resources and producing the maximum amount of output possible with its current technology and resources.

Question 8

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing
A) 10 more tons of clothing.
B) 10 fewer tons of clothing.
C) 5 more tons of clothing.
D) 5 fewer tons of clothing.

Accepted Answer

The answer of 
-The above figure illustrates that if this...

Question 9

A country that must decrease production of one good in order to increase the production of another
A) must be using resources inefficiently.
B) must be producing on its production possibilities frontier.
C) must be producing beyond its production possibilities frontier.
D) must have private ownership of property.

Accepted Answer

The country must be producing on its production possibilities frontier because it has a limited amount of resources and must make a choice between two goods. It is not producing beyond its capabilities, or it would not have to sacrifice production of one good to produce another. Private ownership of property is not relevant to the situation. The fact that the country must make a choice does not necessarily mean that it is using resources inefficiently, as it may be making a rational decision based on the available resources.

Question 10

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid
A) if the United States is producing at a point on its production possibilities frontier.
B) if the United States is producing at a point inside its production possibilities frontier.
C) if the United States is producing at a point beyond its production possibilities frontier.
D) only if the production possibilities frontier shifts rightward.

Accepted Answer

If the United States is producing at a point inside its production possibilities frontier, it means that there is still some unused or underutilized resources. This allows the country to increase the production of defense goods without decreasing the production of other goods, as it can allocate these idle resources towards defense goods. However, if the country is already producing at the frontier (A) or beyond it (C), then the only way to increase the production of defense goods is by sacrificing the production of other goods, unless the production possibilities frontier shifts rightward (D).

Question 11

If a society is operating at a point inside its production possibilities frontier, then this society's
A) resources are being inefficiently utilized.
B) production possibilities frontier will shift rightward.
C) resources are being used in the most efficient manner.
D) economy will grow too fast.

Accepted Answer

If a society is operating inside its production possibilities frontier, it means it is not utilizing all of its available resources. This indicates that the resources are being used inefficiently. Therefore, option A is the correct answer. Options B, C, and D are incorrect because they suggest that the society is operating at its maximum potential, which is not the case.

Question 12

A point inside a production possibilities frontier
A) could indicate that resources are misallocated.
B) is more efficient than a point on the production possibilities frontier.
C) reflects the fact that more technology needs to be developed to fully employ all resources.
D) implies that too much labor and not enough capital is being used.

Accepted Answer

A point inside the production possibilities frontier indicates that resources are not being fully utilized or are being misallocated, resulting in a lower level of output than could be achieved.

Question 13

A reduction in the amount of unemployment
A) shifts the production possibilities frontier outward.
B) moves the economy's point of production closer to the production possibilities frontier.
C) moves the economy's point of production along the production possibilities frontier.
D) moves the economy's point of production further away from the production possibilities frontier.

Accepted Answer

A reduction in unemployment means more resources (labor) are being utilized, which can increase overall production capacity. However, it does not necessarily shift the production possibilities frontier outward. Instead, it moves the economy's point of production closer to the production possibilities frontier, as more resources are being utilized efficiently.

Question 14

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved
A) the highest marginal benefit.
B) production efficiency.
C) the lowest marginal cost.
D) the highest opportunity cost.

Accepted Answer

Production efficiency means that an economy is using its resources in the best possible way to produce goods and services. In this case, Popcorn cannot produce any more jets without giving up corn, so it is using all of its resources to produce those two goods. Therefore, it has achieved production efficiency.

Question 15

-The figure above shows Roger's production possibilities frontier. Point a is an ________ point and at that point production is ________.
A) attainable; efficient
B) attainable; inefficient
C) unattainable; inefficient
D) unattainable; efficient

Accepted Answer

The answer of 
-The figure above shows Roger's production possibilities...

Question 16

Production points inside the production possibilities frontier
A) are unattainable.
B) are attainable only with the full utilization of all resources.
C) are associated with unused or misallocated resources.
D) result in more rapid growth.

Accepted Answer

Production points inside the production possibilities frontier indicate that not all resources are being used efficiently; there is some level of unused or misallocated resources.

Question 17

Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he
A) can increase production of both goods with no increase in resources.
B) is fully using all his resources.
C) values good A more than good B.
D) values good B more than good A.

Accepted Answer

Producing inside the production possibilities frontier indicates that not all resources are being fully utilized. Therefore, Sam can increase production of both goods without needing more resources.

Question 18

Using the production possibilities frontier model, unemployment is described as producing at a point
A) on the exact middle of the PPF curve.
B) on either end of the PPF curve.
C) inside the PPF curve.
D) outside the PPF curve.

Accepted Answer

When an economy is producing inside the PPF curve, it means that it is not utilizing all of its resources and is producing below its potential. This can result in unemployment as there are workers and resources available to produce more goods and services, but they are not being utilized.

Question 19

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce
A) at an inappropriate point along its production possibilities frontier.
B) outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods.
C) inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods.
D) inside its production possibilities frontier.

Accepted Answer

Requiring highly skilled technicians and scientists to engage in unskilled agricultural labor likely resulted in a less efficient use of human resources, causing the economy to operate inside its production possibilities frontier. This is because these individuals could have contributed more effectively to the economy in their areas of expertise.

Question 20

A point inside a production possibilities frontier
A) could indicate that some resources are unemployed.
B) is unattainable.
C) is more efficient than points on the production possibilities frontier.
D) implies that too much capital and not enough labor are being used.

Accepted Answer

A point inside the production possibilities frontier indicates that not all the resources are being used to their full potential. This could be due to some resources being unemployed, which is indicated by the point being inside the frontier.

Quiz 2: The Economic Problem

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

Any point on a production possibilities frontier (PPF) itself is

If production point is inside the production possibilities frontier

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by

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

A society that is producing on its production possibilities frontier is

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

A country that must decrease production of one good in order to increase the production of another

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid

If a society is operating at a point inside its production possibilities frontier, then this society's

A point inside a production possibilities frontier

A reduction in the amount of unemployment

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

-The figure above shows Roger's production possibilities frontier. Point a is an point and at that point production is .

Production points inside the production possibilities frontier

Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Using the production possibilities frontier model, unemployment is described as producing at a point

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

A point inside a production possibilities frontier