Module 3 - The Production Possibilities Curve Model

FRQ #2 - Assume that an economy can choose between producing shelter at a constant opportunity cost. Draw a correct labeled production possibilities curve (PPC) for the economy. On your graph

FRQ#2 a. Use the letter E to label one of the points that is efficient in production b. Use the letter U to label one of the points at which there might be unemployment c. Use the letter I to label one of the points that is not feasible

CYU#1 - True or false? Explain your answer b. A technological change that allows Tom to catch more fish relative to any amount of coconuts gathered results in a change in his production possibilities curve.

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CYU#1 - True or false? Explain your answer c. Points inside a production possibilities curve are efficient and points outside a production possibilities curve are inefficient

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CYU#1 True or false? Explain your answer a. An increase in the amount of resources available to Tom for use in producing coconuts and fish does not change his production possibilities curve.

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efficient

if there is no way to make anyone better off without making at leas tone person worse off

production possibilities curve

illustrates the trade-offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced.

trade-off

when you give up something in order to have something else

MC#5 - Refer to the graph on PAGE 22 to answer the following MC question This production possibilities curve (PPC) shows the trade-off between goods and capital goods. Since capital goods are a resource, an increase in the production of capital goods today will increase the economy's production possibilities in the future. Therefore, all other things equal (ceteris paribus), producing at which point today will result in the largest outward shift of the PPC in the future?

a. A b. B c. C d. D e. E

MC#1 - Refer to the graph on PAGE 22 to answer the following MC question Which point(s) on the graph represent efficiency in production?

a. B and C b. A and D c. A, B, C, and D d. A, B, C, D, and E e. A, B, C, D, E, and F

MC#3 - Refer to the graph on PAGE 22 to answer the following MC question An increase in unemployment could be represented by a movement from point

a. D to point C b. B to point A c. C to point F d. B to point E e. E to point B

MC#2 - Refer to the graph on PAGE 22 to answer the following MC question For this economic, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced

a. cannot happen because there is always an opportunity cost b. is represented by a movement from point E to point A c. is represented by a movement from point C to point B d. is represented by a movement from point E to point B e. is only possible with an increase in resources or technology.

MC#4 - Refer to the graph on PAGE 22 to answer the following MC question Which of the following might allow this economy to move from point B to point F?

a. more workers b. discovery of new resources c. building new factories d. technological advances e. all of the above