Macro 1.2-Opportunity Cost & PPF MCQ Open Practice
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Last updated 11 months ago
10 questions
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If there is increasing opportunity cost, then when moving downward on a production possibilities frontier, the opportunity cost of the good on the horizontal axis ____ as more of the good is produced.
decreases and the PPF gets steeper
increases and the PPF gets flatter
decreases and the PPF gets flatter
increases and the PPF gets steeper
does not change and the PPF gets steeper
Resource use is allocative efficient
when we produce goods and services that we value most highly.
at any point on the PPF.
at all points either on or within the PPF because all these production points are attainable.
when most resources are fully employed.
when it is not possible to produce more of one good.
Why is a production possibilities frontier bowed out?
The bowed shape indicates that opportunity cost at first decreases at a decreasing rate, and then begins to decrease at an increasing rate.
The bowed shape reflects constant opportunity cost.
The bowed shape indicates that opportunity cost at first increases at a decreasing rate, and then begins to increase at an increasing rate.
The bowed shape reflects increasing opportunity cost.
The bowed shape reflects decreasing opportunity cost.
As we move along the production possibilities frontier,
the possibilities of tradeoffs diminish.
more of both goods can be produced.
less of both goods can be produced.
the production of one good increases as the production of the other good decreases.
a tradeoff is not possible because nations need all goods.
To calculate the opportunity cost per unit, you divide the decrease in the quantity of the forgone item by the
increase in the quantity of the other item obtained.
price of the item obtained.
price of the item forgone.
decrease in the quantity of the other item.
price of the item obtained and then multiply by the price of the item forgone.
When all of the available factors of production are being efficiently employed, the
economy is producing at a point on its PPF.
economy is producing at a point beyond its PPF.
PPF disappears.
opportunity cost of changing production is infinite.
economy is producing at a point within its PPF.
If there is unemployment in an economy, then the
production possibilities frontier will shift outwards.
production possibilities frontier will shift inwards.
economy is producing at a point inside the production possibilities frontier.
production possibilities frontier must be bowed inward.
economy is operating at an unattainable point.
When society must decrease the production of something in order to produce more of another good or service, society has necessarily achieved
both production efficiency and allocative efficiency.
only production efficiency.
a free lunch.
only allocative efficiency.
the maximum opportunity cost.
The movement from Curve 1 to Curve 2 indicates:
an economy's increased ability to produce consumer and capital goods.
going from unemployment to full employment.
a decrease in the factors of production.
a shift of the PPF towards producing fewer goods.
a macroeconomic recession.
In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of