AP Microeconomics Topic 1.3

What does a Production Possibilities Curve (PPC) illustrate?

• All combinations of two goods that can be produced with unlimited resources.

• All combinations of two goods that can be produced with fixed resources.

• The maximum profit a company can achieve from producing two goods.

• The demand and supply equilibrium for two different goods.

What does moving along a Production Possibilities Curve (PPC) from one point to another represent?

• An increase in available resources.

• A decrease in overall production efficiency.

• A trade-off between producing more of one good and less of another.

• A shift in consumer preferences.

Based on the provided table, what is the opportunity cost of increasing Math Problems from 20 to 40?

• 5 Fortnite Matches

• 10 Fortnite Matches

• 15 Fortnite Matches

• 20 Fortnite Matches

What does a concave (bowed-out from the origin) Production Possibilities Curve (PPC) indicate about opportunity costs?

• Constant opportunity costs.

• Decreasing opportunity costs.

• Increasing opportunity costs.

• Zero opportunity costs.

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What does a concave Production Possibilities Curve (PPC) indicate about opportunity costs?

• Constant opportunity costs

• Increasing opportunity costs

• Decreasing opportunity costs

• Zero opportunity costs

What does a point of production located on the Production Possibilities Curve (PPC) signify?

• An inefficient use of resources

• Productive efficiency

• An impossible level of production

• A recessionary period

What causes an outward shift of the Production Possibilities Curve (PPC)?

• A decrease in the quality or quantity of resources

• An increase in the quality or quantity of resources

• A natural disaster destroying resources

• A movement from producing capital goods to consumer goods

What is the long-run effect on economic growth if an economy shifts from producing a lot of capital goods to producing more consumer goods?

• Economic growth will accelerate

• Economic growth will slow down

• Economic growth will remain unchanged

• The economy will experience a recession