Points Earned: 1.0 7. Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. Which of the following is true? Efficiency b. specialization c. inefficiency d 18. Investment, entrepreneurial ability, and full employment O Land, labor capital and entrepreneurial ability 0 Full employment, fixed supplies of resources, fixed technology, and two goods Land, full employment, fixed technology. Label the Axes . Is more efficient than a point on the production possibilities frontier. Production Possibility Curve (PPC) is the graphical representation of the possible combinations of two goods that can be produced with given resources and level of technology. B) implies that too much labor and not enough capital is being used. Therefore, any point inside the production possibility curve indicates under utilization of resources because the economy can produce more with the given resources and any point beyond the production possibility curve cannot be achieved because the economy does not have the required resources to produce such amount of ouput. Group of demanders and suppliers of a particular good or service b. If a production point lies inside or on the curve—like point C, at which Tom catches 20 fish and gathers 9 coconuts—it is feasible. Points on the production possibilities curve thus satisfy two conditions: the economy is making full use of its factors of production, and it is making efficient use of its factors of production. Any point inside the frontier reflects production where one or both outputs may be increased without decreasing the other output level. Prof. Paul A. Samuelson used the concept of the production possibility curve to explain the economic problem of a society. Point C is unattainable 1,000 4 5. 3) A point inside a production possibilities frontier A) reflects the fact that more technology needs to be developed to fully employ all resources. If it would be inside the production possibility frontier (PPF), it would reflect too many crops and not enough lawns. If you're seeing this message, it means we're having trouble loading external resources on our website. Since the choice is to be made between infinite possibilities, economists assume that there are only two goods being produced. c. the curve will begin to shift inward. c.) Reflects the fact that more technology needs to be developed to fully employ all resources. Production Possibilities. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. d. the curve will begin to shift outward. 01. of 09. Points inside a production possibilities curve are _____ and _____. O movement toward the curve from a point inside the curve. It is also known as transformation curve. A market is a a. B) technological innovation. Points closer to the curve in the attainable area are more "Efficient", which means that more resourves are being used, and more people are being employed. E) a way to increase future economic growth. Production Possibility Curve (PPC) is the locus (the path of a moving point) of various combinations of two commodities which can be produced with given level of resources and technology. a. D. unemployment. If there are idle or inefficiently allocated factors of production, the economy will operate inside the production possibilities curve. because both commodities can be increased without incurring an opportunity cost . possibilities curve. The PPC shows the combination of goods and/or services that can be produced with the available shared resources. A point beneath the curve indicates inefficiency, and a point beyond the curve indicates impossibility. Attainable and Unattainable Production Possibilities frontier 3,000 C B Quantity of Computers Produced A 0 03/03/14 Quantity of Cars Produced All points on or inside the frontier are attainable Point A is attainable, so is point B. Concepts covered include efficiency, inefficiency, economic growth and contraction, and recession. production possibilities frontier reflects the . D) could indicate that resources are misallocated. Any point of production inside the curve is considered inefficient because the economy is not fully utilizing its resources. D) economic efficiency. If society initially favours car production over airplanes so that we are located in the southeast portion of the frontier, workers become skilled in car production. When it is at full employment, it operates on the PPC. In a recession, unemployed workers are not producing goods and services, so the economy is not producing its long run potential. When an economy is in a recession, it is operating inside the PPC. This situation is caused by the specialization of workers. If an economy is operating at a point inside the production possibilities curve? Could indicate that resources are misallocated. In fact B is better! Choices a.) However, any choice inside the production possibilities frontier is productively inefficient and wasteful because it is possible to produce more of one good, the other good, or some combination of both goods. The production possibilities frontier (PPF for short, also referred to as production possibilities curve) is a simple way to show these production tradeoffs graphically. Draw a production possibility curve that reflects this trade-off. Production-Possibility Frontier delineates the maximum amount/quantities of outputs (goods/services) an economy can achieve, given fixed resources (factors of production) and fixed technological progress.Points that lie either on or below the production possibilities frontier/curve are possible/attainable: the quantities can be produced with currently available resources and technology. This preview shows page 7 - 10 out of 31 pages.. 31. Upon what specific assumptions is this production possibilities curve based? Point C reflects an economy using its resources . If An Economy Is Operating At A Point Inside The Production Possibilities Curve (a) Its Resources Are Being Wasted (b) The Curve Will Begin To Shift Inward (c) The Curve Will Begin To Shift Outward’ (d) This Is A Trick Question Because An Economy Cannot Produce At A Point Inside The Curve. Group of people with common desires c. Place where only sellers meet d. Place where only buyers come together 19. This is a trick question because an economy cannot produce at a point inside the curve. d.) Implies that too much labor and not enough capital is being used. So U.S is operating efficiently. The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. C) is more efficient than a point on the production possibilities frontier. inefficiently. Clearly, such points cannot be production efficient. If an economy is producing at a point inside its PPF: a) it is producing efficiently. Shift to a point on the graph, which reflects growth. increasing opportunity cost when substituting one type of production for another. A point outside a production possibilities curve reflects: A. efficiency. b.) A point outside a production possibilities curve reflects unemployment e. an impossible choice 2. Any point on the frontier (line/curve) is attainable, any point inside the frontier is attainable, ad any point outside the frontier is unattainable. B. specialisation. Production possibility curve shows the different combinations of the production of two commodities that can be achieved in an economy given the resources and technology which are to be fully utilized. It is on the production possibility curve and the allocation reflects people's tastes for lots of lawns, technological advances in producing crops, and the globalization of agricultural markets. In macroeconomics, points inside the curve are used to illustrate a recession. Question: SECTION A [20 MARKS] 1. So if a firm is operating inside the production possibility curve, then it indicates that the firm is not utilizing the supplied resources and technology efficiently. Instructions: Use the tool provided 'PPC' to plot the production possibility curve. 3. Points inside the production possibility curve indicates that the society concerned is not making full and efficient use of its resources and consequently fewer needs and wants are satisfied than is possible. In this video, Sal explains how the production possibilities curve model can be used to illustrate changes in a country's actual and potential level of output. b) it is producing beyond its production possibilities. How does the production possibilities frontier show that every choice involves a tradeoff? Since the given nation has excessive population growth and unskilled labor, the production possibilities curve tends to. C. inefficiency. C) less than full use of resources and technology. A point inside a production possibilities curve reflects: A) the law of increasing costs. b. … After all, the curve tells us that if Tom catches 20 fish, he could also gather a maximum of 15 coconuts, so he could certainly gather 9 coconuts. Points within the curve show when a country’s resources are not being fully utilised a. its resources are not being used efficiently. Production Possibilities Curve. O outward shift of the entire curve. If a point falls inside the production possibility curve it means either the resources are under utilised or there is unemployment in the economy. Here is a guide to graphing a PPF and how to analyze it. Falls inside the PPC combination of goods and/or services that can be produced with the available shared resources Place... Curve indicates inefficiency, economic growth tends to are under utilised or there is in. Be made between infinite possibilities, economists assume that there are only two goods being.. 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