30 Questions
What does achieving production efficiency mean?
Producing more of one good without producing less of some other good
At a point inside the production possibilities frontier (PPF), what does it indicate?
Inefficiency in resource allocation
What does the concept of opportunity cost represent?
The value of the next best alternative foregone
When moving along the production possibilities frontier, what occurs to opportunity costs?
Opportunity costs increase
What tradeoff is involved when making choices along the production possibilities frontier?
Giving up one good to get more of another
What is the main purpose of a Production Possibilities Frontier (PPF)?
To show all possible combinations of goods and services that can be produced efficiently.
What does a point outside the Production Possibilities Frontier (PPF) represent?
Unattainable production levels due to inefficiency.
How does a Production Possibilities Frontier (PPF) demonstrate opportunity cost?
By illustrating the tradeoffs between different production possibilities.
In the context of a Production Possibilities Frontier (PPF), what does 'ceteris paribus' mean?
Holding other factors constant except the ones being analyzed.
What concept does the Production Possibilities Frontier (PPF) help in illustrating when focusing on two goods at a time?
Tradeoffs in production possibilities.
What does the outward bow of the Production Possibilities Frontier (PPF) signify?
Increasing opportunity cost as quantity produced increases.
Which statement best describes points along the Production Possibilities Frontier (PPF) according to the text?
Optimal production efficiency.
What happens to the supply curve if the price of a good is expected to rise in the future?
It shifts leftward
How does an increase in the number of suppliers affect the supply curve?
It shifts rightward
What effect do advances in technology have on the supply curve?
It shifts rightward
How does a natural disaster impact the supply curve?
It shifts leftward
What is the result of improved production technology on the supply of energy bars?
Increases supply
What happens in a market when the price is above the equilibrium price?
The quantity supplied exceeds the quantity demanded
What happens when the market price falls below the equilibrium price?
There is a shortage of goods
At the equilibrium price, what do buyers' and sellers' plans agree on?
Quantity demanded equals quantity supplied
What happens in a market when there is a shortage due to an increase in demand?
Price rises, quantity supplied increases
In a market experiencing a surplus as a result of an increase in supply, what happens to the price and quantity supplied?
Price falls, quantity supplied increases
If both demand and supply increase simultaneously in a market, what happens to the price and quantity exchanged?
Price falls, quantity exchanged increases
When demand decreases while supply increases in a market, what occurs to the price and quantity traded?
Price falls, quantity traded increases
How do markets correct a surplus according to the text?
By lowering prices until demand equals supply
What is illustrated by the Supply Schedule and Supply Curve?
The relationship between quantity supplied and price
When does an increase in quantity supplied occur?
When the price of the good increases
What happens to the supply curve when something other than price changes?
The supply curve shifts to the right or left
How does a change in supply differ from a change in the quantity supplied?
A change in supply involves changes in factors other than price, while a change in quantity supplied only involves a price change.
What occurs to the supply curve when supply increases?
The supply curve shifts rightward
Test your knowledge on key business economic concepts such as production possibilities frontier, tradeoffs, opportunity costs, absolute and comparative advantage, and gains from trade. This quiz is based on the content covered in Chapter 2 of ECON2010 Business Economics.
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