Macroeconomics: Production–possibility Frontier Quiz!

12 Questions | Total Attempts: 6939

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Macroeconomics: Productionpossibility Frontier Quiz!

The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. This quiz has around twelve questions of the same topic; choose the correct answer.


Questions and Answers
  • 1. 
    Which of the following best describes the three fundamental economic questions?
    • A. 

      What to produce, when to produce, and where to produce?

    • B. 

      What time to produce, what place to produce, and how to produce?

    • C. 

      What to produce, when to produce, and for whom to produce?

    • D. 

      What to produce, how to produce, and for whom to produce?

  • 2. 
    Opportunity cost represents the worst of the various alternatives that must be given up when a choice is made in the context of scarcity.
    • A. 

      True

    • B. 

      False

  • 3. 
    A production possibilities curve shows the various combinations of output:
    • A. 

      Consumers would like to consume.

    • B. 

      Producers would like to produce.

    • C. 

      An economy can produce.

    • D. 

      An economy should produce.

  • 4. 
    A production possibilities curve is drawn based on which of the following set of assumptions?
    • A. 

      Resources are fixed and fully employed, and technology advances at the rate of growth of the economy overall.

    • B. 

      Resources such as nonrenewable resources will decline, but labor remains fully employed, and technology is unchanged.

    • C. 

      Resources can vary, most resources experience times of unemployment, and technology advances, particularly during wartime.

    • D. 

      Resources such as labor and capital will grow, are fully employed, and technology is unchanged.

    • E. 

      None of the above are correct.

  • 5. 
    TRUE OR FALSE: Inward shifts in the production-possibilities curve represents economic growth.
    • A. 

      True

    • B. 

      False

  • 6. 
    Which of the following reasons might explain why an economy would be operating inside its production possibilities curve (PPC)?
    • A. 

      Because shrinking population has reduced the number of productive workers in the economy.

    • B. 

      Because technological innovations have increased the productivity of labor and capital.

    • C. 

      Because damage to natural resources, such as might be caused by deforestation leading to erosion of topsoil, has shrunk the land resource.

    • D. 

      Because of unemployment or underemployment of labor, perhaps due to discrimination against employing workers of a certain race or gender.

  • 7. 
    • A. 

      Jogging around town.

    • B. 

      Watching two half-hour TV sitcoms.

    • C. 

      Playing pool.

    • D. 

      The sum of watching two half-hour TV sitcoms, playing pool, and doing your laundry.

  • 8. 
    • A. 

      We also increase the production of food.

    • B. 

      We must decrease the production of food. This foregone food production represents the opportunity cost of the increase in the shelter.

    • C. 

      We cannot change the production of food.

    • D. 

      None of the above.

  • 9. 
    Combinations of goods outside the production-possibilities curve (PPC) have which of the following characteristics?
    • A. 

      They are only attainable today if we employ all unemployed or underemployed resources.

    • B. 

      They are not attainable given our existing stock of resources and technology.

    • C. 

      They imply that some resources, such as labor, are unemployed or underemployed.

    • D. 

      None of the above.

  • 10. 
    TRUE OR FALSE: Everything scarce requires a choice, and these choices always involve an opportunity cost.
    • A. 

      True

    • B. 

      False

  • 11. 
    Which point represents underutilization?
    • A. 

      B

    • B. 

      C

    • C. 

      A and D

    • D. 

      E

  • 12. 
    Which of the following points is not attainable under current situation?
    • A. 

      A

    • B. 

      D

    • C. 

      F

    • D. 

      E