AP Economics 1.3

Assume that an economy produces televisions and shoes. Which of the following would cause the production possibilities curve for this economy to shift outward? A An increase in the labor force B An increase in the prices of both goods C An increase in the prices of resources used to produce both goods D A decrease in the demand for shoes E A change in consumers' tastes in favor of televisions

A

Economic growth can be depicted using a production possibilities curve by which of the following? A A rightward shift of the curve B A movement upward on an existing curve C A movement downward on an existing curve D A movement from a point outside the curve to a point on the curve E A movement from a point on the curve to a point inside the curve

A

A country produces computers and rice. If resources are fully employed and there is technological progress only in the production of rice, the opportunity costs of producing computers and rice will change in which of the following ways? A Opportunity Cost of Computers Increase, Opportunity Cost of Rice Increase B Opportunity Cost of Computers Increase, Opportunity Cost of Rice Decrease C Opportunity Cost of Computers No change, Opportunity Cost of Rice Decrease D Opportunity Cost of Computers Decrease, Opportunity Cost of Rice Increase E Opportunity Cost of Computers Decrease, Opportunity Cost of Rice Decrease

B

An outward shift in the production possibilities curve of an economy can be caused be an increase in A unemployment B the labor force C inflation D output E demand

B

Assume an economy uses one input, labor, to produce two goods, X and Y, with constant opportunity cost. Which of the following would cause a parallel shift to the right of the production possibilities curve (PPC) ? A An increase in the productivity of labor with respect to producing good X B An increase in the amount of labor available for production C A reduction in the unemployment of labor D An increase in the demand for good X and good Y E A change in consumer tastes from good Y to good X

B

If resources were perfectly substitutable in all activities, which of the following would be true? A Output of all goods could be increased at zero opportunity cost. B The production possibilities curve would be a straight line. C Specialization and mutually beneficial trade would be impossible. D No country or individual would have a comparative advantage in any activity. E Scarcity of resources would be eliminated.

B

Improvements in technology for producing all goods must result in A an inward shift in the production possibilities curve B an outward shift in the production possibilities curve C a flatter production possibilities curve D a steeper production possibilities curve E greater unemployment of labor

B

Which of the following is true of an economy's production possibilities curve? A It shows the combinations of any two resources that can be used to produce an efficient level of output. B It shows the alternative combinations of goods that can be produced by fully employing scarce resources. C It must be a straight line when all resources are fully employed. D It is bowed in (convex to the origin) because of changing levels of technology. E It is bowed out (concave to the origin) when marginal opportunity costs are constant.

B

An economy produces two goods: X and Y. Its production possibilities curve is linear with the intercept on the Y axis at 1,000 units and the intercept on the X axis at 100 units. Which of the following statements is correct? A There is an increasing opportunity cost of producing good X, beginning with 1 unit of X costing 0.1 unit of Y. B There is an increasing opportunity cost of producing good Y but not of producing good X, which has a constant opportunity cost. C There is a constant opportunity cost with each unit of good X costing 10 units of good Y. D There is a constant opportunity cost with 10 units of good X costing 1 unit of good Y. E With a linear production possibilities curve, total production of goods X and Y will be the same at each point on the curve.

C

For an economy with a straight-line production possibilities curve, which of the following must be true? The opportunity cost of producing another unit is constant. Resources are completely adaptable to alternative uses. Resources are used efficiently. A I only B II only C III only D I and II E II and III

D

A production possibilities curve can shift inward if there is A an increase in productivity B an increase in unemployment C an increase in the price of raw materials D a misallocation of resources E a natural disaster

E

A production possibilities curve is bowed out, indicating increasing opportunity cost because of A the law of demand B the law of diminishing marginal utility C the existence of unemployment D differences in consumer tastes E imperfect adaptability of resources to alternative uses

E

Which of the following explains why a production possibilities curve is often represented as concave (bowed out) from the origin? A The law of demand B The law of supply C Constant returns to scale D Decreasing opportunity cost E Increasing opportunity cost

E