Question 1

The bowed shape of the production possibilities frontier can be explained by the fact that
A)all resources are scarce.
B)economic growth is always occurring.
C)the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
D)the only way to get more of one good is to get less of the other.

Accepted Answer

The bowed shape of the production possibilities frontier is due to the fact that the opportunity cost of producing more of one good in terms of the other depends on how much of each good the economy is already producing. As more of one good is produced, resources that are better suited for producing the other good must be used, causing the opportunity cost to increase. This leads to a tradeoff between the two goods and results in a curved production possibilities frontier, rather than a straight line.

Question 2

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the
A)amount of the other good that must be given up.
B)market price of the additional amount produced.
C)amount of resources that must be devoted to its production.
D)number of dollars that must be spent to produce it.

Accepted Answer

The opportunity cost of obtaining more of one good is what must be given up in terms of the other good. This is depicted on the production possibilities frontier as a trade-off between the two goods, with the slope of the curve representing the rate at which one must be given up to produce more of the other.

Question 3

The production possibilities frontier illustrates
A)the trade-off between efficiency and equality.
B)the combination of output that an economy should produce.
C)the combination of output that each member of society should consume.
D)None of the above is correct.

Accepted Answer

The production possibilities frontier (PPF) illustrates the trade-offs between different combinations of goods that an economy can produce given its resources and technology, not the options listed in A, B, or C.

Question 4

Which of the following trade-offs does the production possibilities frontier illustrate?
A)If an economy wants to increase efficiency in production,then it must sacrifice equality in consumption.
B)Once an economy has reached the efficient points on its production possibilities frontier,the only way of getting more of one good is to get less of the other.
C)For an economy to consume more of one good,it must stop consuming the other good entirely.
D)For an economy to produce and consume goods,it must sacrifice environmental quality.

Accepted Answer

The production possibilities frontier illustrates the trade-off of producing one good over another. Once an economy has reached the efficient points on its production possibilities frontier, the only way to produce more of one good is to produce less of the other. The other choices are not accurate descriptions of the trade-offs illustrated by the production possibilities frontier.

Question 5

Unemployment would cause an economy to
A)produce inside its production possibilities frontier.
B)produce on its production possibilities frontier.
C)produce outside its production possibilities frontier.
D)experience an inward shift of its production possibilities frontier.

Accepted Answer

Unemployment means that not all resources are being used efficiently, causing the economy to produce inside its production possibilities frontier.

Question 6

On a bowed production possibilities frontier,as you move down along the curve
A)more of one good must be given up to receive one unit of the other good.
B)the available production technology does not change.
C)the opportunity cost increases.
D)All of the above are correct.

Accepted Answer

All of the above are correct.

Question 7

The production possibilities frontier provides an illustration of the principle that
A)trade can make everyone better off.
B)governments can sometimes improve market outcomes.
C)people face trade-offs.
D)people respond to incentives.

Accepted Answer

The production possibilities frontier shows the different combinations of two goods that can be produced with a given set of resources. It illustrates the concept of trade-offs, as producing more of one good requires sacrificing some production of another good.

Question 8

In a certain economy,jam and bread are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more jam and more bread,relative to the quantities of those goods that are being produced now?
A)Unemployed labor is put to work producing jam and bread.
B)The economy puts its idle capital to work producing jam and bread.
C)The economy experiences economic growth.
D)All of the above are correct.

Accepted Answer

Economic growth would allow the economy to produce more of both goods, since it would increase the factors of production (such as labor and capital) available for use in production. Unemployed labor and idle capital may also contribute to an increase in production, but economic growth is a more general and sustainable way to increase production possibilities.

Question 9

Production possibilities frontiers are usually bowed outward.This is because
A)the more resources a society uses to produce one good,the fewer resources it has available to produce another good.
B)the opportunity cost of producing a good decreases as more and more of that good is produced.
C)of the effects of technological change.
D)resources are specialized;that is,some are better at producing particular goods rather than other goods.

Accepted Answer

The bowed-out shape of the production possibilities frontier reflects increasing opportunity costs, which occur because resources are specialized and not equally efficient in producing all goods.

Question 10

Economists believe that production possibilities frontiers
A)never have a bowed shape.
B)rarely have a bowed shape.
C)often have a bowed shape.
D)always have a bowed shape.

Accepted Answer

Production possibilities frontiers often have a bowed shape because resources are not equally efficient in producing all goods. As we move along the curve, the opportunity cost of producing one good increases in terms of the other. This leads to a bowed shape of the production possibilities frontier.

Question 11

In a certain economy,toys and greeting cards are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more toys and more greeting cards,relative to the quantities of those goods that are being produced now?
A)The economy experiences economic growth.
B)There is a technological advance in the toy industry,but the greeting card industry experiences no such advance.
C)There is a technological advance in the greeting card industry,but the toy industry experiences no such advance.
D)All of the above are correct.

Accepted Answer

All of the events listed would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now. Economic growth would increase the economy's productive capacity, allowing it to produce more of both goods. A technological advance in the toy industry would allow the economy to produce more toys with the same amount of resources, freeing up resources that could be used to produce more greeting cards. A technological advance in the greeting card industry would have a similar effect, allowing the economy to produce more greeting cards with the same amount of resources, freeing up resources that could be used to produce more toys.

Question 12

A production possibilities frontier shifts outward when
A)the economy experiences economic growth.
B)the desires of the economy's citizens change.
C)at least one of the basic principles of economics is violated.
D)opportunity costs are lessened.

Accepted Answer

A production possibilities frontier shifts outward when the economy experiences economic growth, which means it is able to produce more goods and services than it was before without sacrificing the production of other goods and services. This can be due to an increase in the quantity or quality of resources, technological advancements, or improvements in the efficiency of production.

Question 13

When an economy is operating inside its production possibilities frontier,we know that
A)there are unused resources or inefficiencies in the economy.
B)all of the economy's resources are fully employed.
C)economic growth would have to occur in order for the economy to move to a point on the frontier.
D)in order to produce more of one good,the economy would have to give up some of the other good.

Accepted Answer

When an economy is operating inside its production possibilities frontier, it means that it is not utilizing all the available resources or is inefficient in its use of resources, which results in the production of fewer goods and services than it possibly can.

Question 14

When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good
A)increases as more of the good is produced.
B)decreases as more of the good is produced.
C)does not change as more of the good is produced.
D)may increase,decrease,or not change as more of the good is produced.

Accepted Answer

A bowed outward production possibilities frontier indicates increasing opportunity costs, meaning that as more of a good is produced, the opportunity cost of producing additional units increases.

Question 15

It is possible for an economy to increase its production of both goods if the economy
A)moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)moves from a situation of inefficient production to a situation of efficient production.

Accepted Answer

An economy can increase its production of both goods by moving from a point of inefficiency inside the production possibilities frontier to a point on the frontier, indicating efficient production.

Question 16

Which of the following concepts cannot be illustrated by the production possibilities frontier?
A)efficiency
B)opportunity cost
C)equality
D)trade-offs

Accepted Answer

The production possibilities frontier only illustrates the trade-offs between two goods and the opportunity cost of producing one over the other. Efficiency can be illustrated by producing at the point on the frontier, where all resources are fully utilized. However, equality is a social goal that cannot be fully represented on the production possibility frontier as it does not take into account the distribution of goods and services among individuals.

Question 17

Economists believe that production possibilities frontiers are often bowed because
A)trade-offs inevitably create unemployment.
B)resources are not completely adaptable.
C)opportunity costs are constant.
D)of improvements in technology.

Accepted Answer

Production possibilities frontiers are bowed because resources are not completely adaptable. This means that an increase in the production of one good requires sacrificing the production of another good. The more resources are shifted towards the production of one good, the less productive they become in producing other goods. This creates a diminishing marginal rate of transformation and leads to the bowed shape of the production possibilities frontier. The other choices are incorrect because trade-offs do not inevitably create unemployment, opportunity costs may vary along the production possibility curve, and improvements in technology may shift the entire production possibilities frontier outward, but they do not affect its shape.

Question 18

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 1000 units of food and 47 machines.This year,it is producing 1050 units of food and 52 machines.Which of the following events could not explain the increase in output?
A)a reduction in unemployment
B)an increase in available labor
C)an improvement in technology
D)Any of these events could explain the increase in output.

Accepted Answer

A reduction in unemployment or an increase in available labor both lead to an increase in the economy's available resources, which can be used to produce more goods. An improvement in technology allows for more efficient production, increasing output with the same amount of resources. However, none of these can explain an increase in output without a corresponding increase in available resources, such as labor or capital. Therefore, A is the correct answer as a reduction in unemployment would not directly increase available resources.

Question 19

The country of Gerance produces two goods,cars and wine.Last year,it produced 1,000 cars and 15,000 cases of wine.This year,it produced 1,300 cars and 20,000 cases of wine.Given no other information,which of the following events could not explain this change?
A)Gerance experienced a reduction in unemployment.
B)Gerance experienced an improvement in car-making technology.
C)Gerance acquired more resources.
D)Any of these events could explain the change.

Accepted Answer

All the events listed could potentially explain the increase in production of both cars and wine, as they all suggest an increase in productive capacity or efficiency.

Question 20

A production possibilities frontier can shift outward if
A)government increases the amount of money in the economy.
B)there is a technological improvement.
C)resources are shifted from the production of one good to the production of the other good.
D)the economy abandons inefficient production methods in favor of efficient production methods.

Accepted Answer

A production possibilities frontier (PPF) represents the maximum combination of two goods that an economy can produce given its resources and technology. If there is a technological improvement, the economy can produce more of both goods, which shifts the PPF outward. Choices A, C, and D do not result in a shift of the PPF outward. Increasing the amount of money in the economy (Choice A) can lead to inflation but does not increase the economy's productive capacity. Shifting resources from the production of one good to another (Choice C) only results in a movement along the PPF. Abandoning inefficient production methods in favor of the efficient ones (Choice D) also provides for more efficient resource allocation, it only leads to a movement along the PPF limited by technology.

Quiz 2: Thinking Like an Economist: The Economist As Scientist

The bowed shape of the production possibilities frontier can be explained by the fact that

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

The production possibilities frontier illustrates

Which of the following trade-offs does the production possibilities frontier illustrate?

Unemployment would cause an economy to

On a bowed production possibilities frontier,as you move down along the curve

The production possibilities frontier provides an illustration of the principle that

In a certain economy,jam and bread are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more jam and more bread,relative to the quantities of those goods that are being produced now?

Production possibilities frontiers are usually bowed outward.This is because

Economists believe that production possibilities frontiers

A production possibilities frontier shifts outward when

When an economy is operating inside its production possibilities frontier,we know that

When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good

It is possible for an economy to increase its production of both goods if the economy

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Economists believe that production possibilities frontiers are often bowed because

The country of Gerance produces two goods,cars and wine.Last year,it produced 1,000 cars and 15,000 cases of wine.This year,it produced 1,300 cars and 20,000 cases of wine.Given no other information,which of the following events could not explain this change?

A production possibilities frontier can shift outward if