movement in ppc curve

Question 1

What causes a movement in the production possibility curve (PPC)?

Answer 1

The decision to change the composition of goods produced

This can occur due to government directives in a command economy or changes in demand for alternative goods in a market economy.

Question 2

What does the slope of the PPC curve illustrate?

Answer 2

The opportunity cost of producing more of one good involves producing less of another good

The downward sloping nature of the PPC curve reflects this trade-off.

Question 3

In the example of increasing clothing production, what is sacrificed?

Answer 3

Food production

This illustrates the opportunity cost when prioritizing one good over another.

Question 4

What is the opportunity cost of producing an extra 2 million units of clothing?

Answer 4

3 million units of food forgone

This is shown by moving from point x to point y on the PPC.

Question 5

What does a production possibility curve illustrate?

Answer 5

The microeconomic issues of choice and opportunity cost

It visually represents the trade-offs in production decisions.

Question 6

Fill in the blank: A movement in the production possibility curve is caused by the decision to change the _______.

Answer 6

composition of goods produced

Question 7

True or False: The PPC curve is always upward sloping.

Answer 7

False

The PPC curve is typically downward sloping, indicating the trade-off between two goods.