Economics Topic 1 And 2

Question 1

What does PPF stand for in economics?

Answer 1

Production Possibility Frontier

Question 2

What does the PPF curve represent?

Answer 2

The maximum output combinations of two goods that an economy can produce given its resources and technology

Question 3

True or False: Points inside the PPF curve represent efficient use of resources.

Answer 3

False

Question 4

What does a point outside the PPF curve indicate?

Answer 4

It indicates that production levels are unattainable with the current resources and technology

Question 5

What does a straight-line PPF curve indicate about the opportunity cost?

Answer 5

Constant opportunity cost

Question 6

What does a bowed-outward PPF curve indicate about the opportunity cost?

Answer 6

Increasing opportunity cost

Question 7

What does a bowed-inward PPF curve indicate about the opportunity cost?

Answer 7

Decreasing opportunity cost

Question 8

What does moving along the PPF curve represent?

Answer 8

Shifting resources from one good to another to maintain the same level of total output

Question 9

What does a shift of the PPF curve to the right indicate?

Answer 9

An increase in the economy’s production capacity

Question 10

What does a shift of the PPF curve to the left indicate?

Answer 10

A decrease in the economy’s production capacity

Question 11

What is the opportunity cost of moving from point A to point B on the PPF curve?

Answer 11

The quantity of the good being given up to produce more of the other good

Question 12

What is the main assumption behind the PPF curve?

Answer 12

Resources are fully utilized and efficiently allocated

Question 13

In economics, what does the law of increasing opportunity cost state?

Answer 13

To produce more of one good, a successively larger amount of the other good must be sacrificed

Question 14

What does the PPF curve not show?

Answer 14

It does not show the distribution of resources among different goods

Question 15

What is the purpose of using a PPF curve in economics?

Answer 15

To illustrate the concept of opportunity cost and trade-offs in production decisions

Question 16

What does a point on the PPF curve indicate?

Answer 16

Efficient use of resources to produce a combination of goods

Question 17

What does a point below the PPF curve indicate?

Answer 17

Underutilization of resources

Question 18

What does a point above the PPF curve indicate?

Answer 18

Unattainable production levels with current resources and technology

Question 19

What factor can cause the PPF curve to shift outward?

Answer 19

Technological advancements or an increase in available resources

Question 20

What factor can cause the PPF curve to shift inward?

Answer 20

Natural disasters or a decrease in available resources

Question 21

What is the economic implication of a PPF curve shifting outward?

Answer 21

Potential for increased economic growth and higher levels of production

Question 22

What is the economic implication of a PPF curve shifting inward?

Answer 22

Potential for decreased economic growth and lower levels of production

Question 23

What does a point of tangency on the PPF curve represent?

Answer 23

Optimal allocation of resources to maximize total output

Question 24

What does a point inside the PPF curve indicate in terms of resource allocation?

Answer 24

Inefficient allocation of resources

Question 25

What is the key concept behind the PPF curve in economics?

Answer 25

Scarcity and the necessity of making trade-offs in production