PPFs 1

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Question 1/10

1870

An economy is described as productively efficient when it is operating in such a way that:

it maintains full employment of all its workers, regardless of how output is organised it minimises the total cost of transporting goods domestically it exports more goods than it imports it can only increase the production of one good by producing less of another it maximises the profit earned by every individual firm

Question 2/10

1871

The diagram below shows a production possibility frontier for an economy producing food and machinery, with points labelled P, Q, R and S. Which of the labelled points represents a combination the economy could not currently produce?

PPF diagram with several points, both attainable and unattainbale

P Q R S All of the points are currently attainable

Question 3/10

1884

The diagram below shows a production possibility frontier for an economy producing tablets and textbooks, with points E, F, G and H marked. Which one of the labelled points shows a combination that is currently unattainable given the economy's existing resources?

PPF with a range of points- some attainable and some not

E F G H All of the labelled points are currently attainable.

Question 4/10

1872

The diagram below shows a production possibility frontier for an economy producing goods A and B. The economy moves from point Y to point Z along the frontier. What is the opportunity cost, in units of good A, of increasing production of good B from 70 to 90 units?

20 30 40 50 10

Question 5/10

1873

The diagram below shows a country's production possibility frontier shifting from PPF1 to PPF2, with no change in the maximum possible output of good X. Which of the following is the most likely explanation for this shift?

An improvement in technology specific to the production of good Y A natural disaster reducing the country's resources A fall in the country's population A general increase in the size of the labour force An increase in unemployment

Question 6/10

1892

A shift to the left (inward) of a country's production possibility frontier, affecting both goods, most likely reflects

an improvement in the efficiency with which existing resources are used. a rise in the opportunity cost of only one of the two goods. a fall in the country's productive capacity. a rise in the country's rate of economic growth. a fall in the country's level of unemployment.

Question 7/10

1874

The diagram below shows a production possibility frontier for an economy producing goods A and B, where the economy is initially at point W, producing 40 units of good A and 50 units of good B. Assuming there is no change in the position of the PPF, a movement from point W to point Z illustrates that there has been

an increase in the use of previously unemployed or underused resources a rise in the opportunity cost of good A an improvement in technology a fall in the country's productive capacity underlying potential economic growth

Question 8/10

1875

The diagram below shows a production possibility frontier for an economy. The economy moves from point M (inside the frontier) to point N (on the frontier), with no change in the position of the PPF. Which of the following correctly describes the effect of this movement?

Potential GDP rises, but actual GDP is unchanged Both actual and potential GDP rise by the same amount Actual GDP rises, but the economy's potential GDP is unchanged Both actual and potential GDP fall There is no effect on either actual or potential GDP

Question 9/10

1876

The diagram below shows a production possibility frontier for consumer goods and capital goods. Two countries, Country X and Country Y, are both currently producing on this same frontier - Country X at point X, and Country Y at point Y. What is most likely to be true of the two countries in the future?

PPF with two points and consumer and capital goods

Country Y's PPF will shrink in the future Both countries will have identical economic growth in the future Country X will have higher economic growth in the future than Country Y Neither country's PPF will change in the future Country X will have lower economic growth in the future than Country Y

Question 10/10

1879

The diagram below shows straight-line production possibility frontiers for the Village and the Town, both producing bread and butter. The opportunity cost of butter, in terms of bread,

PPF for town and village of butter and bread

is greater for the Town than for the Village. is the same for both the Village and the Town. decreases as more butter is produced. increases as more butter is produced. is greater for the Village than for the Town.