Quiz on Production Possibility Frontiers

What do production possibility frontiers (PPFs) depict?

• The future potential of an economy

• The maximum productive potential of an economy

• The minimum productive potential of an economy

• The average productive potential of an economy

What does the law of diminishing returns state?

• Opportunity cost is irrelevant

• Opportunity cost remains constant

• Opportunity cost increases as production increases

• Opportunity cost decreases as production increases

What does producing at points C or D indicate?

• Efficient use of resources

• Inefficient use of resources

• Maximum output potential

• Optimal production levels

What does producing at point E represent?

• Attainable production

• Maximum efficiency

• Inefficient production

• Unattainable production

What does an outward shift in the PPF indicate?

• Constant resources

• Economic growth

• Decreased production capacity

• Economic decline

What is the opportunity cost of producing 100 units of cheese?

• 50 units of yoghurt

• 30 units of yoghurt

• 90 units of yoghurt

• 40 units of yoghurt

What are capital goods?

• Services provided to consumers

• Consumer goods only

• Goods that cannot be used to produce other goods

• Goods used to produce other goods

What is allocative efficiency?

• Producing more of one good without reducing another

• Using resources inefficiently

• No one can be made better off without making someone else worse off

• Maximizing total production

What does moving along the PPF involve?

• Shifting the PPF curve

• Using the same number of resources

• Increasing opportunity cost

• Changing the quantity of resources

What is the result of an inward shift of the PPF?

• Higher opportunity cost

• Economic decline

• Increased efficiency

• Economic growth