Topic Questions (MCQ – EASY): Production Possibility Curves – 3auk

What is the purpose of a production possibility curve?

To illustrate a firm's maximum yearly output

To show the maximum output that can be produced per worker per year in the economy

To demonstrate the maximum export potential of a country

To depict the maximum output of two or more goods in an economy from a given amount of inputs

What is a possible cause for the shift from WX to YZ in a country’s production possibility curve?

A rise in the rate of interest.

An increase in employment among the existing labour force.

The shutdown of an inefficient factory.

The discovery of a new resource.

A restaurant has different production possibilities as shown in the diagram. If they want to increase rice production from 15 units to 25 units, what is the opportunity cost?

Giving up 10 units of rice

Giving up 15 units of rice

Giving up 20 units of noodle

Giving up 50 units of noodle

The diagram shows a country's production possibility curve for manufactured goods and agricultural products. Which statement is true based on the diagram?

If the country produces at point Q, it can produce more of both goods.

The country should produce at point T instead of Q.

The country would be better off producing at V than S.

The monetary costs are the same to produce at V as they are to produce at R.

What conclusion can be drawn from the shape of the production possibility curve shown in the diagram?

There are decreasing marginal returns to consumption.

There are decreasing opportunity costs of consumption.

There are increasing opportunity costs of production.

There are increasing returns to scale.