Production Possibilities Curve (Module 3)

What change could cause the production possibilities curve to shift from the original curve (XX') to the new curve (YY')? a. higher wages for workers b. increased education level of the nation's work force c. increased energy prices

b. increased education level of the nation's work force

If BB' represents a country's current production possibilities curve, what can you say about a point like X? a. It's inefficient. b. It's perfectly efficient. c. It's impossible to produce at this level under current circumstances.

c. It's impossible to produce at this level under current circumstances.

The opportunity cost of increasing production of Good A from one unit to two units is the loss of _ units of Good B.

2

The opportunity cost of increasing production of Good A from two units to three units is the loss of _ units of Good B.

2

The opportunity cost of increasing production of Good A from zero units to one unit is the loss of _ units of Good B.

2

The opportunity cost of increasing production of Good A from one unit to two units is the loss of _ units of Good B.

4

The opportunity cost of increasing production of Good A from two units to three units is the loss of _ units of Good B.

6

Which of the graphs above indicates zero opportunity cost per unit of Good B? a. A b. B c. C d. D

A

Suppose a new government comes into power and forbids the use of automated machinery and modern production techniques in all industries. Which curve of the diagram would represent the new production possibilities curve? Don't forget to assume that, prior to this change, the country was at curve BB. Indicate by typing the two capitalized letters marking this curves intersections with the axes. (do not type the apostrophe).

AA

Suppose there is a major technological breakthrough in the consumer-goods industry, and the new technology is widely adopted. Which curve in the diagram would represent the new production possibilities curve? Indicate by typing the two capitalized letters marking this curves intersections with the axes. (do not type the apostrophe).

BD

Which of the graphs above indicates increasing opportunity cost per unit of Good B? a. A b. B c. C d. D

C

Suppose massive new sources of oil and coal are found within the economy, and there are major technological innovations in both industries. Which curve in the diagram would represent the new production possibilities curve (again, assuming we started out at BB)? Indicate by typing the two capitalized letters marking this curves intersections with the axes. (do not type the apostrophe).

CC

Which of the graphs above indicates constant opportunity cost per unit of Good B? a. A b. B c. C d. D

D

If BB' represents a country's current production possibilities curve, what can you say about a point like Y? a. It's inefficient. b. It's impossible to produce at that level under current circumstances. c. It's perfectly efficient.

a. It's inefficient.

Under which circumstance would the country be most likely to produce at point Z? a. The country faces high unemployment. b. The country has improved its infrastructure, like its roads. c. The country has very few regulations on businesses.

a. The country faces high unemployment.

Why might a government enact a policy intended to move production from point B to point A? a. The government wants to improve the quality of life of its citizens by producing more consumer goods. b. Point A is less efficient. c. Point B is more efficient. d. The government wants to invest in more capital goods so that they can produce more goods for the future.

d. The government wants to invest in more capital goods so that they can produce more goods for the future.