Production Possibility Curves
96 questions· page 1 of 10
The production possibility curve shows the maximum potential output of apples and pears for an economy using current resources.
Which pair of positions identifies an efficient and an inefficient outcome?
Options
A W and Y
B W and X
C X and Z
D Y and Z
The diagram shows the production possibilities for barley and wheat in countries Q and R.
What can be concluded?
Options
A Country Q has a comparative advantage in the production of barley.
B Country Q has an absolute advantage in producing both goods.
C Country R has an absolute advantage in the production of barley.
D There is no comparative advantage.
The diagram shows the production possibility curves of two countries, X and Y.
What can be concluded from the diagram?
Options
A Both countries have decreasing opportunity cost in the production of consumer goods.
B Both countries should produce 40 units of capital goods and 20 units of consumer goods.
C Country Y has constant opportunity cost in the production of consumer goods.
D Country Y is producing more consumer goods than country X.
The diagram shows an outward shift of the production possibility curve from PPC1 to PPC2.
What could have caused this shift?
Options
A a decrease in mineral resources
B a decrease in prices of consumer goods
C an increase in employment
D an increase in technology
The diagram shows a country’s production possibilities. Points K, L, M, N, R and S represent different combinations of capital goods and consumer goods. Point K cannot be achieved unless there is economic growth. Point M lies on the country’s production possibility curve.
Which two points must be on opposite sides of the country’s production possibility curve?
Options
A K and N
B L and R
C N and R
D R and S
What does a production possibility curve show?
Options
A the actual demand in an economy given its existing resources
B the maximum output an economy can achieve using existing resources
C the maximum output an economy can ever achieve
D the minimum combinations of output an economy can achieve
The diagram shows a production possibility curve for an economy that produces capital goods and consumer goods.
Why is the production possibility curve drawn concave to the origin?
Options
A Capital goods are a more labour-intensive output than consumer goods.
B Consumers always seek to maximise their satisfaction from consumption.
C Profit maximisation for firms always ensures efficiency in production.
D Some resources are more efficient in production of some goods than others.
The graph shows the total economic welfare derived by citizens from a government’s expenditure on health and education services.
If the government has $60 billion of its budget to allocate between health and education services, which allocation will give its citizens the highest level of welfare?
Options
| health spending ($ billions) | education spending ($ billions) | |
|---|---|---|
| A | 0 | 60 |
| B | 20 | 40 |
| C | 40 | 20 |
| D | 60 | 0 |
The diagram shows a production possibility curve (PPC) for a country that produces two goods, X and Y. The initial PPC is given by ST.
What is the effect on the PPC when the productivity of workers producing good X increases?
Options
A The PPC shifts from ST to SV.
B The PPC shifts from ST to SW.
C The PPC shifts from ST to UT.
D The PPC shifts from ST to UW.
The diagram shows a production possibility curve (PPC) for an economy that produces two goods, X and Y. Both goods require labour to produce. The initial position of the PPC is at PPC0.
What is the effect on the PPC following the emigration of a large number of workers?
Options
A the PPC remains at PPC0
B the PPC shifts from PPC0 to PPC1
C the PPC shifts from PPC0 to PPC2
D the PPC shifts from PPC0 to PPC3