Economics Production Possibilities Curve Quiz

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Questions and Answers

What factor explains the concave shape of the production possibilities curve?

Decreased prices of paper and ink
Increased productive efficiency from F to H
Differing skills among writers (correct)
Improvement in printing technology

Which of the following is least likely to contribute to the benefits of specialization?

Repetition makes tasks more engaging (correct)
Optimal assignment based on individual strengths
Reduction in transition time between tasks
Improvement of skills through practice

What specialization strategy will lead to maximum total production between the U.S. and Mexico?

U.S. specializing in both agricultural and manufactured goods
U.S. specializing in manufactured goods and Mexico in agricultural goods (correct)
Mexico specializing in both agricultural and manufactured goods
U.S. specializing in agricultural goods and Mexico in manufactured goods

What is Poor Old Johnny Ray's opportunity cost of sounding sad on the radio?

1/2 of putting on a red dress (D) Signup and view all the answers

Why is the production possibilities curve typically concave?

Due to diminishing returns in production (C) Signup and view all the answers

Which statement is true about the opportunity costs of production?

They can vary based on resource allocation (D) Signup and view all the answers

What effect does specialization have on productivity?

It promotes the division of labor (C) Signup and view all the answers

If Mexico has a lower opportunity cost in agriculture compared to the U.S., who should specialize in what?

U.S. in manufactured goods, Mexico in agriculture (B) Signup and view all the answers

Flashcards

Concave PPC: Reason

Increasing opportunity cost of producing goods as resources are shifted between productions. Different individuals possess different skills for different tasks.

Specialization & Greater Production

Increased production is due to workers becoming more proficient and taking less time to transition between activities when they focus on a narrow set of tasks.

Comparative Advantage: Example

The principle that countries should specialize in producing goods in which they have the lowest opportunity cost, leading to maximum global output.

Comparative Advantage (USA/Mexico)

For maximum global production, the U.S. should specialize in manufactured goods, and Mexico in agricultural goods.