Traditions and Encounter 3rd Edition CH. 22

Refer to Krugman's Macroeconomics for AP 2nd Edition, Page. 22 Graph Which points on the graph represent productive efficiency? 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

C) These points all lie on the Production Possibilities Curve despite that they don't make consumers as well off (Allocative Efficiency).

Refer to Krugman's Macroeconomics for AP 2nd Edition, Page. 22 Graph An increase in unemployment could be represented by a movement by 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.

D) B to point E. This change in the Production Possibilities Curve would result in the overall area under the curve becoming smaller

Technology

The technical means for producing goods and services.

Production Possibilities Curve

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

True or false? 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. 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. C) Points inside a production possibilities curve are efficient and points outside a production possibilities curve are inefficient.

A) False. A change in aggregate output would shift the Production Possibilities Curve outward as more resources are now available. B) True. An increase in the aggregate output of fish will cause a shift in the Production Possibilities Curve. C) False. Points within the Production Possibilities Curve are inefficient as more products that can be gained, such as fish or coconut. Points outside the Production Possibilities are all together unfeasible.

Refer to Krugman's Macroeconomics for AP 2nd Edition, Page. 23 Graph This production possibilities curve shows the trade-off between consumer 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

A) Point A

Refer to Krugman's Macroeconomics for AP 2nd Edition, Page. 23 Graph Which of the following might allow this economy to move from point B to point F? A) more workers C) discovery of new resources C) building new factories D) technological advances E) all of the above

E) All of the Above

Productive Efficiency

When an economy is producing at a point on the Production Possibilities Curve.

Allocate Efficiency

When an economy produces at a point on the Production Possibilities Curve that makes consumers well off as possible.

Efficient

When there is no missed opportunities. There's no way to make a person better off without making another person worse off.

Trade-Off

When you give up something in order to have something else.