Production Possibilities Curve MCQ Quiz Questions And Answers
Do you know about the production possibility curve? To test your knowledge, take this MCQ on Production Possibilities Curve 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.
In such a quiz, you may encounter questions covering various aspects of the PPC, including its shape, slope, factors that cause shifts in the curve, opportunity cost, efficiency, and points of allocative and productive efficiency. Each question presents different scenarios or diagrams related to the PPC, requiring participants to analyze and apply economic Read moreprinciples to select the correct answer from multiple options. This quiz has several informative questions on the same topic. Choose the correct answer to get the perfect score. All the best! Don't forget to share the quiz.
Production Possibilities Curve 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
Correct Answer
D. What to produce, how to produce, and for whom to produceExplanation
The three fundamental economic questions are concerned with the allocation of resources in an economy. "What to produce" refers to the decision of which goods and services should be produced based on consumer demand and resource availability. "How to produce" refers to the choice of production methods and techniques to use in order to efficiently produce the selected goods and services. "For whom to produce" refers to the decision of how the produced goods and services should be distributed among the members of society, taking into consideration factors such as income, wealth, and need.Rate this question:
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- 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
Correct Answer
B. FalseExplanation
The statement is incorrect. Opportunity cost represents the value of the next best alternative that is forgone when a choice is made. It is not necessarily the worst alternative, but rather the value of the alternative that is sacrificed.Rate this question:
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- 3.
Suppose that the alternative uses of an hour of your time in the evening, ranked from best to worst, are (i) studying economics, (ii) watching two half-hour TV sitcoms, (iii) playing pool, and (iv) jogging around the town. You can only choose one activity. What is the opportunity cost of studying economics for one hour, given this information?
- 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.
Correct Answer
B. Watching two half-hour TV sitcoms.Explanation
The opportunity cost of studying economics for one hour is the value of the next best alternative that is forgone, which is watching two half-hour TV sitcoms. This means that by choosing to study economics, you are giving up the enjoyment and entertainment of watching the sitcoms. The other options listed, such as jogging around town, playing pool, and doing laundry, are ranked lower in terms of preference and therefore have a lower opportunity cost compared to watching the sitcoms.Rate this question:
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- 4.
A production possibilities curve shows the various combinations of the output of ___________
- A.
What consumers would like to consume?
- B.
What producers would like to produce?
- C.
What an economy can produce?
- D.
What should an economy produce?
Correct Answer
C. What an economy can produce?Explanation
A production possibilities curve shows the various combinations of the output that an economy can produce. It represents the maximum amount of goods and services that can be produced given the available resources and technology. The curve illustrates the trade-offs that an economy faces when allocating its resources between different goods and services. It helps to determine the efficiency and productive capacity of an economy by showing the possible combinations of production.Rate this question:
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- 5.
What does a point inside the Production Possibilities Curve (PPC) represent?
- A.
Efficient use of resources
- B.
Inefficient use of resources
- C.
Unattainable production level
- D.
Maximum possible output
Correct Answer
B. Inefficient use of resourcesExplanation
A point inside the Production Possibilities Curve (PPC) represents the inefficient use of resources, meaning that the economy or entity is not producing at its full potential. It indicates that resources such as labor, capital, and technology are underutilized. Points on the curve represent maximum efficiency, while points outside the curve (C) are unattainable with current resources. Points inside the curve suggest that there is room to improve production without needing additional resources.Rate this question:
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- 6.
If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then if we increase the production of housing along the PPC, which of the following is correct?
- 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.
Correct Answer
B. We must decrease the production of food. This foregone food production represents the opportunity cost of the increase in the shelter.Explanation
If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then increasing the production of housing along the PPC will result in a decrease in the production of food. This is because resources are limited, and allocating more resources to housing means there are fewer resources available for food production. The decrease in food production represents the opportunity cost of increasing shelter production, as the economy has to give up the production of food to produce more shelter.Rate this question:
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- 7.
Which of the following reasons might explain why an economy would be operating inside its production possibilities curve (PPC)?
- A.
Because the 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 might be caused, such as 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.
Correct Answer
D. Because of unemployment or underemployment of labor, perhaps due to discrimination against employing workers of a certain race or gender.Explanation
An economy operating inside its production possibilities curve (PPC) indicates that it is not utilizing all of its available resources efficiently. The given answer suggests that the reason for this could be unemployment or underemployment of labor, potentially due to discrimination against certain races or genders. This means that there are workers who are capable and willing to work but are not being given the opportunity, leading to a suboptimal use of resources and a lower level of output than what could be achieved.Rate this question:
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- 8.
Which of the following characteristics do the combinations of goods outside the production possibilities curve (PPC) have?
- 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.
Correct Answer
B. They are not attainable, given our existing stock of resources and technology.Explanation
The correct answer suggests that combinations of goods outside the production possibilities curve (PPC) are not attainable with the current stock of resources and technology. This means that the economy is not able to produce these combinations of goods efficiently or effectively. It implies that there is a limit to the production capacity and that the economy would need to improve its resources and technology in order to reach these combinations.Rate this question:
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- 9.
Which point represents underutilization?
- A.
B
- B.
C
- C.
A and D
- D.
E
Correct Answer
B. CExplanation
Point C represents underutilization because it is below the production possibilities curve, indicating that resources are not being fully utilized to produce goods and services.Rate this question:
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- 10.
Which of the following points is not attainable under the current situation?
- A.
A
- B.
D
- C.
F
- D.
E
Correct Answer
D. EExplanation
Point E is the unattainable point. Production possibilities curves (PPCs) depict the maximum achievable output combinations for two goods, given limited resources. Points that fall outside the curve, like point E, represent scenarios that are impossible to achieve with the current resource constraints.Rate this question:
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Sep 17, 2024Quiz Edited by
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Sep 10, 2012Quiz Created by
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