Production Possibility Curve (902)

If a point lies on the curve this means the company/country/individual is being efficient. If a point lies inside the curve, what does that tell?

• They are being over efficient

• They are being inefficient

• It is not impossible with the given resources

• They are still efficient, just at another point

What does point B represent?

• Production at greater than the country's minimum potential

• Production is less than the country's minimum potential

• Production is greater than the country's maximum potential

• Production at the country's maximum potential

What does point Y represent on the PPC?

• Efficiency
• Unattainable / impossible
• Inefficency
• Nothing

Which letter represents the O.C. of moving from A to G?

• H

• I

• M

• K

• L

Which letter represents the O.C. of moving from C to E?

• H

• I

• J

• K

• L

How does a production possibility curve show that scarcity exists?

• It shows that a rise in demand for one of the products increases its price.

• It shows that as more resources are used to produce a product, its price rises.

• It shows that at any point outside the production possibility curve an economy is wasting

  resources.

• It shows that there is a limit to the quantity of products that can be produced with existing resources and technology.

An economy produces different types of goods using its limited resources. This can be illustrated by a production possibility curve.

What does point X on the production possibility curve show?

• All resources are used for the production of consumer goods.

• More resources are allocated to producing capital goods than consumer goods.

• Resources are allocated to produce a mixture of consumer and capital goods.

• Total resources are not being fully utilised for production of these goods.

The diagram shows two production possibility curves for an economy.

What could have caused the change in the economy’s production possibility curve from XX

to YY?

• a decrease in the price level

• a large number of industrial disputes

• a major earthquake

• an increase in unemployment

The diagram shows a production possibility curve for an economy that can provide financial services or agricultural products. The economy is at point X.

Bad weather destroys part of the agricultural produce.

At which point will the economy be in the diagram?

• A

• B

• C

• D

The diagram shows a production possibility curve for an economy that can produce agricultural products or financial services. It is currently at point Q.

A crop disease decreases agricultural production but the financial services sector increases output as a result of an increase in demand.

To which point is the economy likely to move?

• A

• B

• C

• D