60 Questions
What is the Production Possibility Curve (PPC) based on?
Fixed resources and technology
What does the PPC demonstrate?
The maximum potential output of two goods
What is the concept illustrated by moving along the PPC?
Opportunity cost
What shape of PPC suggests increasing opportunity costs?
Concave curve
What can cause a change in the PPC?
Improvements in technology
What does an outward shift in the PPC indicate?
Economic growth
What is the PPC used to illustrate?
The trade-offs and opportunity costs associated with resource allocation
What happens when there is a leftward shift in the PPC?
A reduction in resources or technological setbacks
What is the number of goods or services assumed to be produced in a PPC?
Two
What is the implication of a straight line PPC?
Constant opportunity costs
What do indifference curves show?
The different combinations of two goods that provide the same level of satisfaction
Which of the following is a cause of market failures?
Uneven income distribution
What is a measure taken by governments to correct monopolies?
Regulating monopolies
What can high inflation rates lead to?
Eroded purchasing power and destabilized economy
What is the goal of government policies in addressing market failures?
To move the economy towards the PPC
What does the PPC represent?
The trade-offs and choices facing economies due to scarce resources
What can be a consequence of inefficiencies in resource allocation?
The economy operates inside the PPC curve
What is an example of government intervention to correct market failures?
Environmental regulations
What is a result of pollution, according to the content?
Irreversible environmental damage
What is the role of government in correcting market failures?
To correct market failures and promote equitable distribution of resources
What is the main purpose of the Production Possibility Curve (PPC)?
To show the trade-offs between two goods or services
What is assumed in a PPC about the resources and technology?
They are fixed and constant
What is the implication of a concave PPC?
Increasing opportunity costs
What is a result of an improvement in technology in a PPC?
An outward shift of the PPC
What is a consequence of a leftward shift in the PPC?
A reduction in resources or technological setbacks
What is the main difference between a concave and a convex PPC?
The opportunity costs of production
What is the relationship between the production of two goods or services in a PPC?
They are trade-offs with each other
What is the effect of an increase in resource availability on the PPC?
It leads to an outward shift of the PPC
What is the significance of the PPC in resource allocation?
It helps in allocating resources efficiently
What is the PPC used to illustrate in economics?
The concept of opportunity cost
What is the primary purpose of indifference curves in understanding consumer behavior?
To show different combinations of two goods that provide the same level of satisfaction
Which of the following is a consequence of uneven income distribution?
Social and economic inequalities
What is the primary goal of government intervention in markets?
To correct market failures and promote efficient resource allocation
What is the consequence of an economy operating inside the PPC curve?
Resources are not being used efficiently
Which of the following is a tool used by central banks to control inflation?
Monetary policy
What is the primary role of indifference curves in understanding consumer behavior?
To determine the level of satisfaction or utility from different goods
What is the consequence of pollution on the environment?
Harm to society's well-being
What is the primary goal of government policies in addressing market failures?
To move the economy towards the PPC curve
What is the primary consequence of monopolies in the market?
Reduced competition and potentially higher prices
What is the primary goal of antitrust laws?
To prevent monopolistic practices and promote competition
What is the primary assumption underlying the Production Possibility Curve?
Resources are fully employed and technology is constant
What shape of the PPC indicates that the economy is experiencing decreasing returns to scale?
Convex curve
What is the effect of an improvement in technology on the PPC?
An outward shift of the PPC
What is the result of a decrease in resource availability on the PPC?
A leftward shift of the PPC
What is the implication of a PPC with a straight line shape?
Constant opportunity costs
What is the primary reason for the PPC to shift outward?
All of the above
What is the relationship between the PPC and the concept of opportunity cost?
The PPC demonstrates the trade-off between two goods, illustrating opportunity costs
What is the effect of external factors on the PPC?
Either an outward or leftward shift of the PPC
What is the implication of producing at a point inside the PPC?
The economy is underutilizing its resources
What is the primary purpose of the PPC in resource allocation?
To show the maximum potential output of two goods with limited resources
What is the primary implication of an economy operating inside the PPC curve?
Inefficient allocation of resources
What is the primary goal of government policies in addressing market failures in terms of resource allocation?
To move the economy towards the PPC
What is the primary consequence of monopolies in the market?
Higher prices
What is the primary role of indifference curves in understanding consumer behavior?
To show the impact of changes in income or prices on consumption choices
What is the primary consequence of uneven income distribution?
Social and economic inequalities
What is the primary goal of antitrust laws?
To promote competition
What is the primary consequence of high inflation rates?
Eroded purchasing power and destabilized economy
What is the primary role of government intervention in markets?
To correct inefficiencies and promote equitable distribution of resources
What is the primary implication of a shift in the PPC curve?
A change in the availability of resources
What is the primary goal of government policies in addressing environmental pollution?
To prevent irreversible environmental damage
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